2.2 Credit cards review

What is the Annual Percentage Rate (APR)?

• a) The fee charged for transferring balances
• b) The interest rate charged on outstanding balances
• c) The amount of cash back offered for purchases
• d) The penalty for missed payments

What is the grace period?

• a) The time between your credit limit and actual spending
• b) The period when you are charged a late fee
• c) The time between the end of a billing cycle and the due date to pay the bill
• d) The time before your credit score is updated

What is the minimum payment?

• a) The maximum amount you can borrow on the card
• b) The amount you must pay to avoid interest charges
• c) The smallest amount you must pay each month to avoid late fees and penalties
• d) The total amount due on your credit card

What is a credit limit?

• a) The maximum amount you can borrow on the card
• b) The minimum balance you must maintain
• c) The interest rate charged on your card balance
• d) The amount available after rewards are deducted

What are rewards programs?

• a) Offers low introductory APRs
• b) Earn points, miles, or cash back on purchases
• c) Charge interest on outstanding balances
• d) Transfer balance from one card to another

What is a balance transfer credit card?

• a) A card with a low credit limit
• b) A card offering low introductory APRs for transferring existing credit card debt
• c) A card used for earning rewards on purchases
• d) A card that requires a security deposit

What is the snowball method of paying off debt?

• a) Paying off the highest interest rate balance first
• b) Paying off the largest debt first
• c) Paying off the lowest dollar amount balance first
• d) Making minimum payments on all debts

What is the avalanche method of paying off debt?

• a) Paying off the lowest dollar amount balance first
• b) Paying off debts with the highest interest rate first
• c) Paying off only credit card debt
• d) Making minimum payments on all debts

What is a secured credit card?

• a) A card that offers high rewards for purchases
• b) A card that requires a security deposit and helps build credit history
• c) A card with a high credit limit
• d) A card used only for transferring balances

What is credit utilization?

• a) The percentage of your credit limit that you are using
• b) The total amount of debt you owe
• c) The minimum payment required each month
• d) The length of time you've had your credit card