#1
What are credit card finance charges?
Interest charged on the unpaid balance
ExplanationInterest applied to outstanding debt.
#2
Which of the following is not considered a finance charge?
Annual membership fees
ExplanationMembership fees are not directly tied to borrowing costs.
#3
What is the purpose of the minimum payment on a credit card?
To keep the account in good standing
ExplanationEnsures account remains active and avoids default.
#4
What is the primary purpose of the Truth in Lending Act (TILA)?
To protect consumers by requiring clear disclosure of credit terms
ExplanationEnsures transparency in credit agreements.
#5
Which billing cycle method typically results in higher finance charges?
Two-Cycle Billing
ExplanationThis method calculates interest based on two months' worth of balances.
#6
What does the Average Daily Balance billing method involve?
Interest calculated on the average daily balance throughout the billing cycle
ExplanationInterest computed from the average daily balance during the billing period.
#7
In credit card billing, what does 'grace period' refer to?
The period after the due date before interest is charged
ExplanationTime when no interest is levied on new purchases.
#8
Which factor does NOT typically influence the finance charges on a credit card?
Annual income
ExplanationIncome isn't a direct factor affecting interest rates.