4C: Costs & Benefits of Different Credit

What is the primary purpose of the annual percentage rate (APR) on a credit card?

• To determine the credit limit

• To calculate the interest on unpaid balances

• To set the annual fee

• To establish the grace period

Which of the following is a benefit of using a credit card responsibly?

• Accumulating high-interest debt

• Improving your credit score

• Increasing your credit limit automatically

• Avoiding all types of fees

How does a high credit score impact your credit card options?

• It limits the types of credit cards you can apply for

• It increases the interest rates on credit cards

• It provides access to better credit card offers

• It decreases your credit limit

What is a common disadvantage of using credit cards?

• Earning rewards points

• Building a credit history

• Paying high-interest rates on unpaid balances

• Having a fixed credit limit

Which feature of a credit card agreement specifies the time frame during which you can pay your balance without incurring interest?

• Annual fee

• Grace period

• Credit limit

• Finance charge

What is the Schumer box used for in credit card agreements?

• To display the card's design

• To outline key terms and fees

• To provide customer service contact information

• To list the cardholder's spending history

Which type of credit card typically requires you to load funds onto it before use?

• Rewards card

• Pre-paid card

• Secured card

• Balance transfer card

How can understanding your credit limit help you manage your credit card usage?

• It allows you to avoid exceeding your limit and incurring fees

• It automatically increases your credit score

• It ensures you never have to pay interest

• It guarantees approval for all purchases

What is a finance charge on a credit card?

• A fee for exceeding your credit limit

• The interest charged on unpaid balances

• A penalty for late payments

• The annual fee for using the card

Which of the following is a type of credit card that offers lower interest rates for transferring balances from other cards?

• Rewards card

• Balance transfer card

• Pre-paid card

• Secured card