Understanding Credit Cards Basics

What is a credit card primarily used for?

• Making cash deposits

• Borrowing money to make purchases

• Writing checks

• Opening a savings account

Which of the following is a common feature of most credit cards?

• Fixed interest rate for all users

• Credit limit

• No expiration date

• Requires a co-signer

What does APR stand for in relation to credit cards?

• Annual Payment Rate

• Annual Percentage Rate

• Average Payment Ratio

• Actual Payment Rate

Which organization is most likely to issue a credit card?

• Grocery store

• Bank

• Car dealership

• Gas station

What is the minimum payment on a credit card?

• The full balance owed

• The smallest amount you must pay each month

• The interest charged

• The credit limit

Which of the following best describes a credit card statement?

• A list of all your bank accounts

• A monthly summary of your credit card activity

• A checkbook register

• A loan application

If you pay your credit card balance in full every month, what happens?

• You pay interest on the full amount

• You avoid paying interest charges

• Your credit limit decreases

• You are charged a late fee

Which of the following is NOT a type of credit card?

• Secured credit card

• Debit card

• Rewards credit card

• Student credit card

What is a credit limit?

• The minimum amount you must pay each month

• The maximum amount you can borrow on your card

• The interest rate charged

• The amount of cash you can withdraw

Which of the following actions can negatively impact your credit score?

• Paying your balance in full

• Making late payments

• Using less than 30% of your credit limit

• Reviewing your statement