#1
Which of the following is NOT a common credit card finance charge?
Transaction fee
ExplanationFee for a specific transaction, not a standard finance charge.
#2
What is the purpose of the minimum payment on a credit card?
To meet the requirement to keep the account open
ExplanationEnsures account stays active, avoiding closure due to non-payment.
#3
What is the grace period on a credit card?
The period during which no interest is charged on new purchases
ExplanationTimeframe when interest is not applied to new transactions.
#4
Which of the following is a factor used in the calculation of credit card interest?
The card's annual fee
ExplanationAnnual fee contributes to overall cost and interest calculation.
#5
What does the term 'balance transfer' refer to in credit card finance?
Transferring a balance from one credit card to another with lower interest rates
ExplanationMoving debt to a card with lower interest for cost savings.
#6
Which of the following is NOT a potential consequence of failing to pay the minimum amount due on a credit card?
Automatic account closure
ExplanationClosure is not an immediate consequence; other penalties apply.
#7
What is the main purpose of a credit card's billing cycle?
To track the cardholder's spending activity
ExplanationPeriodic tracking of cardholder's financial transactions.
#8
Which method calculates credit card interest based on the average daily balance of the billing cycle?
Average daily balance method
ExplanationInterest determined by the average balance throughout the billing period.
#9
What does APR stand for in the context of credit cards?
Annual Percentage Rate
ExplanationAnnual cost of borrowing, including interest and fees.
#10
What is the main purpose of the CARD Act?
To regulate credit card transactions and protect consumers
ExplanationLegislation ensuring fair practices and consumer protection.
#11
Which type of credit card typically offers rewards or cashback on purchases?
Rewards credit card
ExplanationCard providing incentives, such as cashback or rewards.
#12
What is the main purpose of the Credit CARD Act of 2009?
To regulate credit card fees and disclosures
ExplanationLegislation focusing on fee regulation and transparent disclosures.
#13
Which of the following is NOT a method commonly used to calculate credit card interest?
Fixed rate method
ExplanationUncommon method; interest often varies based on factors.
#14
Which law requires credit card issuers to disclose terms and fees clearly and conspicuously in credit card offers?
Truth in Lending Act (TILA)
ExplanationLegal requirement for transparent credit card disclosures.
#15
Which factor affects the finance charges on a credit card the most?
The cardholder's payment history
ExplanationPast payment behavior influences current finance charges.
#16
What is the purpose of the Schumer Box?
To display the terms and conditions of a credit card in a standardized format
ExplanationStandardized format for clear presentation of card terms.
#17
What is the purpose of the Schumer Box in credit card disclosures?
To summarize key terms and fees associated with the card
ExplanationConcise summary for easy understanding of card terms.
#18
What does the term 'grace period' mean in the context of credit cards?
The period during which cardholders can make purchases without interest charges
ExplanationTimeframe allowing interest-free purchases.
#19
Which method calculates credit card interest based on the balance at the end of the previous billing cycle?
Previous balance method
ExplanationInterest determined by the balance at the end of the preceding billing period.