Navigating Credit and Debit Card Differences

The video tutorial explains the functions and differences between credit and debit cards. Debit cards are linked to a bank account and allow users to spend only what they have, while credit cards offer a line of credit with spending limits and require repayment with interest if not paid on time. The video discusses the pros and cons of each, including ease of management, safety, and rewards. It advises viewers to choose a card based on their financial habits and ability to manage money effectively.

What is required to own a debit card?

• A minimum balance of $1000

• A checking or savings account

• No existing loans

• A credit score above 600

How does a credit card differ from a debit card in terms of account linkage?

• It is linked to multiple accounts

• It must be linked to a checking account

• It does not require a linked account

• It requires both checking and savings accounts

What happens if you fail to pay back the bank for credit card expenses on time?

• The bank will increase your credit limit

• The bank charges a late fee or added interest rate

• The bank will offer a grace period

• The bank cancels the credit card

What is a major benefit of using credit cards responsibly?

• Automatic fraud protection

• No need to pay back the borrowed money

• Building a good credit score

• Unlimited money access

Which statement is true about debit cards?

• They limit spending to the account balance

• They help in building credit score

• They are less prone to fraud

• They offer extensive rewards

What is a significant risk when using credit cards?

• Mandatory insurance fees

• Yearly membership cancellations

• High interest rates on late payments

• Unlimited spending

How does using a credit card impact your financial credibility?

• Decreases your financial stability

• Improves your credit score when used responsibly

• Has no impact on financial measures

• Always leads to debt accumulation

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Why might someone prefer a debit card over a credit card?

• It offers large cashback rewards

• It is linked to a credit line

• It prevents overspending

• It automatically pays off debts

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What is a common consequence of not managing a credit card properly?

• Automatic account closure

• Accumulation of high interest rates

• Decreased interest rates

• Increased spending limit

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What should be considered when choosing between a debit and a credit card?

• Personal spending habits

• The color of the card

• The popularity of the bank

• The number of ATMs available