Credit Card Interest

Paying only the minimum balance on your credit card can lead to...

• an increase in your credit score

• paying more interest.

• late fees

• All of the above

When you buy something using this method you have to pay it back. Sometimes it requires interest. What is this?

• Borrowing

• Income

• Investing

• Credit

What is interest

• Something you like to do

• Excessive borrowing

• A fee paid for the use of someone else's money

• used to buy something now and pay it for later

The cost of borrowed money, usually expressed as a percentage.

• interest

• savings plan

• scarce

• purchase

Over time, people who pay off their credit card balance in full every month will pay less in (a)   on their credit card.

• interest

• false

Answer explanation

Paying off the credit card balance in full every month eliminates the need to pay interest, resulting in paying less on the credit card.

What is the primary reason credit card companies charge interest?

• To encourage spending

• To cover administrative costs

• To make a profit

• To reward loyal customers

Which of the following is a consequence of not paying your credit card bill on time?

• Increased credit limit

• Lower interest rates

• Late fees and higher interest rates

• Improved credit score

What is the term for the interest rate charged on unpaid credit card balances?

• Annual Percentage Rate (APR)

• Credit Utilization Rate

• Debt-to-Income Ratio

• Credit Score

How can you avoid paying interest on your credit card purchases?

• By paying the minimum balance

• By paying the full balance each month

• By using multiple credit cards

• By increasing your credit limit

What happens to your credit card interest rate if you miss several payments?

• It decreases

• It stays the same

• It increases

• It is eliminated