#1
What does APR stand for in credit card terms?
Annual Percentage Rate
ExplanationAPR represents the yearly cost of borrowing funds.
#2
Which of the following is NOT a common credit card fee?
Interest-free period fee
ExplanationInterest-free period fee isn't typically charged on credit cards.
#3
What is the difference between a debit card and a credit card?
Debit cards are linked to a checking account and immediately deduct funds, while credit cards allow you to borrow money up to a certain limit.
ExplanationDebit cards draw from existing funds; credit cards borrow up to a limit.
#4
What does the term 'Cash Advance' refer to in credit card terms?
Using your credit card to withdraw cash from an ATM
ExplanationIt's withdrawing cash from an ATM using your credit card.
#5
What is a credit limit on a credit card?
The maximum amount you can spend using your credit card
ExplanationIt's the highest spending amount allowed on your credit card.
#6
What is the purpose of a CVV code on a credit card?
To provide additional security for card-not-present transactions
ExplanationCVV codes enhance security for online transactions.
#7
What is the grace period on a credit card?
The time during which you can make a purchase without interest
ExplanationThe grace period is the time where interest is not charged on purchases.
#8
What does the term 'Minimum Payment Due' mean on a credit card statement?
The least amount of money you must pay to avoid late fees
ExplanationIt's the smallest amount required to prevent late fees on your statement.
#9
Which of the following is NOT considered when calculating your credit score?
Income level
ExplanationIncome level isn't directly factored into credit score calculations.
#10
What is a penalty APR on a credit card?
An increased interest rate applied to your balance when you miss a payment
ExplanationIt's a higher interest rate triggered by missed payments.
#11
Which of the following is an example of a secured credit card?
Capital One Secured Mastercard
ExplanationCapital One Secured Mastercard is a type of secured credit card.
#12
What is a balance transfer fee on a credit card?
A fee charged for transferring a balance from one credit card to another
ExplanationIt's a charge for moving debt from one card to another.
#13
What is a credit utilization ratio?
The ratio of your credit card balance to your available credit
ExplanationIt's the proportion of your credit limit currently being used.
#14
What is a credit card grace period typically measured in?
Days
ExplanationGrace periods are usually measured in days.
#15
Which of the following is a disadvantage of using credit cards?
Potential for overspending and debt accumulation
ExplanationCredit cards may lead to overspending and accruing debt.
#16
What is the main difference between a secured credit card and an unsecured credit card?
Unsecured credit cards require a security deposit, while secured credit cards do not
ExplanationSecured cards don't need deposits; unsecured ones do.
#17
What does it mean to 'default' on a credit card?
To fail to make payments on the credit card as agreed
ExplanationDefaulting is failing to meet agreed-upon payment terms.