U4L3 BW Finance

Which is not an advantage of using a credit card?

• You might be able to earn cash back or rewards

• Using a credit card responsibly can improve your credit score.

• Credit cards are like free money.

• A credit card can be easier/safer to carry than cash.

Select the possible disadvantages to using a credit card.

Hint: More than 1!

• Carrying a credit card can make it easier to spend money.

• If you lose a credit card, there is no way to cancel it.

• There will be interest charged on every purchase you make with a credit card.

• Paying your credit card bill late can negatively impact your credit score.

1. You should never apply for a credit card.

• TRUE

• FALSE

Which of the following statements comparing credit and debit cards is TRUE?

• Far more businesses accept credit cards than debit cards

• Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

• Credit card companies provide you with a monthly statement, while debit cards do not

• With debit cards, you're spending your own money, while with credit cards, you're promising to pay back the money eventually

Why is a credit card a type of debt?

• Credit cards are only used in stores and not between friends.

• Credit card companies charge a small fee to use them.

• Using a credit card is borrowing money that needs to be paid back later.

• Using a credit card allows you to earn points and rewards.

A term for "the amount of money that has been borrowed" is...

• term

• APR

• Debtor

• principal

Julian needs a new computer for his business that will cost $2,000 and has two options. He can buy it with his credit card (APR = 18%) and pay it off over 1 year or he can get a loan (APR = 9%) and pay it off over 1 year. Which option will cost less in interest charges?

• Credit Card

• Loan

Which form of credit is an example of installment credit?

• Auto/Car Loan

• Credit Card

• Gas card

• Electricity Bill