WorksheetsCredit & Debt Test
Total questions: 25
Worksheet time: 13mins
Name
Class
Date
1.
What happens when someone uses a credit card to make a purchase?
a)
They spend money they already own
b)
They increase their savings
c)
They borrow money that must be repaid with interest
d)
They earn free money
2.
Why do lenders charge interest on credit?
a)
To help people save money
b)
To reward responsible spending
c)
To reduce credit card balances
d)
To make a profit from lending money
3.
Which option is an example of a credit option?
a)
Debit card
b)
Cash
c)
Credit card
d)
Gift card
4.
What is interest?
a)
Money earned from a job
b)
A discount from a store
c)
Money saved in a bank
d)
The cost of borrowing money
5.
How does interest affect the total cost of using credit?
a)
It lowers the price of the item
b)
It only applies to debit cards
c)
It can increase the total amount paid over time
d)
It removes debt faster
6.
How does credit history affect credit options?
a)
It guarantees approval for everyone
b)
It only matters for debit cards
c)
It replaces the need for income
d)
Lenders use it to decide approval and interest rates
7.
What is a credit score mainly used to predict?
a)
How wealthy someone is
b)
How likely someone is to repay borrowed money
c)
How much cash someone carries
d)
How much someone saves each month
8.
Which action most strongly affects credit history?
a)
Making on time payments
b)
Earning more income
c)
Saving extra money
d)
Using only cash
9.
Which behavior is most likely to hurt a credit score?
a)
Paying on time
b)
Having no debt
c)
Missing or paying late on payments
d)
Checking a credit report
10.
Why do minimum payments keep people in debt longer?
a)
They eliminate interest automatically
b)
They pay the debt off immediately
c)
They often mostly pay off only interest instead of the balance
d)
They lower the total cost by $1,000
11.
Which credit option charges interest if not paid in full and on time?
a)
Credit card
b)
Debit card
c)
Cash
d)
Gift Card
12.
What is a credit report?
a)
A record of cash spending
b)
A list of savings goals
c)
A monthly budget
d)
A record of credit accounts and payment behavior
13.
Why is it important to review your credit report?
a)
To raise your income
b)
To find errors or fraud that could affect credit options
c)
To remove interest
d)
To qualify for a debit card
14.
How are risk and interest rates connected?
a)
Higher risk often leads to higher interest rates
b)
Higher risk lowers interest
c)
Risk and interest are unrelated
d)
Interest depends only on income
15.
Why do lenders look at credit history?
a)
To track spending habits
b)
To check savings balances
c)
To determine job placement
d)
To decide whether to lend and what interest to charge
16.
Which situation best shows how interest increases cost?
a)
Paying cash adds interest
b)
Using a debit card adds interest
c)
A loan with a higher interest rate costs more over time
d)
Saving money increases interest owed
17.
What connection exists between credit and long term financial stress?
a)
Credit removes financial risk
b)
Interest can increase how much is owed over time
c)
Debt guarantees stability
d)
Borrowing eliminates stress
18.
Why do people who avoid debt not need a credit score?
a)
They earn less income
b)
They avoid budgeting
c)
They spend more money
d)
They are not borrowing money
19.
Interest is the price paid for borrowing money.
a)
True
b)
False
20.
Credit cards are the only examples of credit options.
a)
True
b)
False
21.
Credit history can affect approval and interest rates.
a)
True
b)
False
22.
Paying late can harm credit history.
a)
True
b)
False
23.
Making minimum payments is the best way to quickly pay off debt.
a)
True
b)
False
24.
A credit score measures how wealthy someone is.
a)
True
b)
False
25.
Credit history reflects past borrowing behavior.
a)
True
b)
False
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