#1
Which of the following is not a factor to consider when choosing a credit card?
Card color
ExplanationCard color is not a factor; consider interest rates, fees, rewards, and credit limit.
#2
What is the recommended action if you suspect fraudulent activity on your credit card?
Notify your credit card issuer immediately
ExplanationAlerting the issuer promptly helps prevent further unauthorized charges.
#3
Which of the following is a potential consequence of missing credit card payments?
Late fees and increased interest rates
ExplanationDelinquent payments incur penalties and may lead to higher interest rates.
#4
What is the primary purpose of a credit card's CVV code?
To verify that the card is legitimate and not stolen
ExplanationCVV adds a layer of security by confirming possession of the physical card.
#5
Which of the following actions can help improve your credit score?
Paying bills on time and keeping credit card balances low
ExplanationTimely payments and low credit utilization positively affect credit scores.
#6
What is the purpose of the 'due date' on a credit card statement?
The date by which you must make a payment to avoid late fees
ExplanationMissing the due date results in penalties, potentially damaging credit.
#7
What does APR stand for in relation to credit cards?
Annual Percentage Rate
ExplanationAPR indicates the yearly cost of borrowing, including interest and fees.
#8
What is the 'minimum payment' on a credit card statement?
The smallest amount of money you must pay by the due date
ExplanationIt's the lowest sum to avoid penalties, but paying more reduces interest.
#9
What does 'balance transfer' mean in the context of credit cards?
Moving debt from one credit card to another with lower interest rates
ExplanationTransferring balances can save money on interest if the new card offers better terms.
#10
What is the purpose of a 'grace period' on a credit card?
A period during which you can make purchases without accruing interest
ExplanationIt's a window where you won't be charged interest if the balance is paid in full.
#11
What is the main difference between a credit card and a debit card?
Credit cards allow you to borrow money from the issuer, while debit cards use funds directly from your bank account.
ExplanationCredit cards offer a line of credit; debit cards deduct funds instantly from your account.
#12
What is a 'cash advance' on a credit card?
Withdrawing cash from an ATM using your credit card
ExplanationCash advances often incur high fees and interest, unlike regular purchases.
#13
How does a credit card issuer determine your credit limit?
By considering your credit score, income, and debt level
ExplanationYour creditworthiness, income, and debt influence the maximum amount you can borrow.
#14
What is 'credit utilization ratio' in relation to credit cards?
The percentage of available credit you're currently using
ExplanationIt's the ratio of your outstanding balances to your total credit limits.
#15
Which of the following statements about credit card interest is true?
Interest compounds over time, meaning you pay interest on both the principal and any accrued interest
ExplanationInterest on unpaid balances accrues, increasing the total owed over time.