Credit Card Terms
What does “APR” stand for and what does it represent?
Annual Percentage Rate; it’s the yearly interest rate you pay if you carry a balance.
What happens if you miss your credit card payment?
You’ll be charged a late fee and it can hurt your credit score.
What’s a signature transaction on a debit card?
A transaction that runs through the credit network and doesn’t require your PIN.
What should you do immediately if your card is lost or stolen?
Report it to the bank to freeze it and avoid liability.
You get your first credit card. What’s the smartest habit to build right away?
Pay the full balance on time every month.
What’s the difference between a fixed and variable APR?
Fixed APR stays the same; variable APR can change based on the market.
What is the “minimum payment”?
The smallest amount you must pay to avoid penalties, but it leads to more interest.
How are prepaid debit cards different from regular debit cards?
Prepaid cards aren’t linked to a bank account; you load money onto them manually.
Why is it safer to use a credit card online than a debit card?
Credit cards offer stronger fraud protection and don’t pull from your bank account.
You want to improve your credit score but can’t afford full payments. What should you avoid?
Avoid maxing out your limit; pay more than the minimum when possible.
What is a credit limit, and how is it determined?
The maximum you can borrow on a card; based on credit history, income, and score.
How do late payment fees relate to federal regulations?
Regulations limit how high late fees can be and require disclosures.
What protections are missing with debit cards compared to credit cards?
Less fraud protection; it’s harder to get money back if stolen or misused.
How can text/email alerts help protect your card?
They let you know instantly about suspicious charges or low balances.
You’re offered a card with amazing rewards but a 27% APR. Is it worth it?
Only if you never carry a balance; otherwise, the APR outweighs the rewards.
What does a balance transfer allow you to do?
Move debt from one credit card to another, usually with a lower APR.
Why is carrying a balance risky even if you make payments?
Interest compounds, and you may end up paying much more than you spent.
What is an overdraft fee and how can it be avoided?
A fee for spending more than your balance; opt out of overdraft or set alerts.
How could someone be liable for charges on a stolen debit card?
If you wait too long to report it, you may have to pay hundreds out of pocket.
Your debit card was used for a $500 charge you didn’t make. What determines if you get the money back?
How quickly you report it and the policies of your bank.
Name one type of special credit card and its key benefit.
Student card (easier to get), rewards card (cashback/points), or low-interest card (less costly debt).
How does your credit card APR impact total repayment over time?
A higher APR means you’ll pay significantly more if you carry a balance long-term.
Why are debit cards often recommended for people struggling with budgeting?
You can only spend what you have, helping avoid debt and overspending.
What is the most secure way to use a card in public?
Use chip or contactless, shield your PIN, and avoid skimmers at ATMs.
You plan to travel and use your card a lot. What precautions should you take first?
Notify your bank, enable alerts, and have a backup card with you.