HOW CREDIT CARDS WORK
This is the maximum amount of money a credit card company allows you to borrow.
What is a credit limit?
This three-digit number shows how trustworthy you are with borrowed money.
What is a credit score?
This law requires lenders to clearly disclose credit terms like APR and fees.
What is the Truth in Lending Act?
Risk is defined as this.
What is the potential for loss?
This insurance covers damage to your car and injuries from accidents.
What is auto insurance?
This is the percentage charged on borrowed money if you don’t pay your balance in full.
What is APR (Annual Percentage Rate)?
This factor has the biggest impact on your credit score.
What is payment history?
This law protects you from unfair billing practices and gives you the right to dispute charges.
What is the Fair Credit Billing Act?
Choosing not to buy insurance and paying out of pocket if something happens is called this.
What is accepting risk?
This insurance protects your belongings in an apartment.
What is renter’s insurance?
If you only pay the minimum balance each month, this happens to the total amount you owe over time.
What is the balance increases due to interest (or you pay much more over time)?
Carrying high balances compared to your limit affects this part of your credit score.
What is credit utilization?
This law allows you to check your credit report and dispute errors.
What is the Fair Credit Reporting Act?
Installing a security system or driving safely is an example of this.
What is reducing risk?
This insurance replaces part of your income if you cannot work due to injury or illness.
What is disability insurance?
This period allows you to avoid interest charges if you pay your balance in full.
What is the grace period?
Name two risks of using credit irresponsibly.
What are debt accumulation, high interest costs, damaged credit score, collections, legal action, etc.?
This law prevents debt collectors from harassing or threatening consumers.
What is the Fair Debt Collection Practices Act?
Buying insurance is an example of this risk strategy.
What is transferring risk?
This insurance helps cover medical expenses.
What is health insurance?
Explain how a credit card transaction works from swipe to statement.
What is: The card issuer pays the merchant → the purchase is added to your account → you receive a monthly statement → you pay the balance (in full or partially) → interest is charged if not paid in full?
Give three ways to build a high credit score.
What are paying bills on time, keeping balances low, limiting new credit applications, keeping old accounts open, monitoring credit reports?
This act limits sudden interest rate increases and protects young consumers under 21.
What is the Credit Card Act?
DAILY DOUBLE
Clue: Classify this situation: A person drives without car insurance to save money.
What is accepting high risk?
This insurance provides financial support to beneficiaries after death.
What is life insurance?