Understanding Money Management Basics

Which of the following best describes a debit card?

• It allows you to borrow money from a bank to make purchases.

• It withdraws money directly from your checking account when you make a purchase.

• It is only used for online shopping.

• It helps you build your credit history.

Answer explanation

A debit card directly withdraws funds from your checking account for purchases, unlike credit cards that allow borrowing. This makes the second option the best description of a debit card.

Tags

TEKS.MATH.6.14B

What is the main difference between a credit card and a debit card?

• Credit cards require a PIN for every purchase.

• Debit cards let you spend money you already have, while credit cards let you borrow money.

• Debit cards can only be used at ATMs.

• Credit cards are only for adults.

Answer explanation

The main difference is that debit cards allow you to spend your own money from your bank account, while credit cards enable you to borrow money up to a certain limit, which you must pay back later.

Tags

TEKS.MATH.6.14B

• $70 increase

• $30 increase

• $20 decrease

• $50 decrease

Answer explanation

You deposit $50, increasing your balance. Then, you withdraw $20, decreasing it. The net change is $50 - $20 = $30 increase, making the correct answer $30 increase.

Tags

TEKS.MATH.6.14C

• $65

• $115

• $125

• $115

Answer explanation

Start with $100. After depositing $40, the balance is $140. Then, withdraw $25, resulting in a new balance of $115. Therefore, the correct answer is $115.

Tags

TEKS.MATH.6.14C

Why is it important to establish a positive credit history?

• It helps you get discounts at stores.

• It makes it easier to borrow money or get approved for loans in the future.

• It increases your bank account balance.

• It allows you to avoid paying taxes.

Answer explanation

Establishing a positive credit history is crucial because it makes it easier to borrow money or get approved for loans in the future, allowing you to access funds when needed.

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TEKS.MATH.6.14D

Which of the following actions can help you build a positive credit history?

• Paying your bills on time

• Ignoring your credit card statements

• Spending more than your credit limit

• Only using cash

Answer explanation

Paying your bills on time is crucial for building a positive credit history, as it demonstrates reliability to lenders. The other options can negatively impact your credit score.

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TEKS.MATH.6.14D

What information is typically included in a credit report?

• Your favorite color

• Your payment history, amounts owed, and types of credit used

• Your school grades

• Your social media accounts

Answer explanation

A credit report typically includes your payment history, amounts owed, and types of credit used, which are crucial for assessing your creditworthiness. Other options like favorite color or school grades are irrelevant.

Tags

TEKS.MATH.6.14E

How long does most negative information, like late payments, stay on your credit report?

• 1 year

• 7 years

• 20 years

• Forever

Answer explanation

Most negative information, such as late payments, remains on your credit report for 7 years. This duration allows creditors to assess your creditworthiness based on your recent financial behavior.

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TEKS.MATH.6.14E

Which of the following is a way to pay for college without taking on debt?

• Student loans

• Scholarships

• Credit cards

• Payday loans

Answer explanation

Scholarships are financial awards that do not need to be repaid, making them a way to pay for college without incurring debt. In contrast, student loans, credit cards, and payday loans all involve borrowing money that must be repaid.

Tags

TEKS.MATH.6.14G

What is a work-study program?

• A program where you pay tuition by working at a local business after graduation

• A program that allows students to work part-time while attending college to help pay for expenses

• A scholarship for students who get good grades

• A loan that must be repaid after college

Answer explanation

A work-study program allows students to work part-time while attending college, helping them cover expenses like tuition and living costs. This distinguishes it from scholarships and loans, which have different purposes.

Tags

TEKS.MATH.6.14G