Credit Card Basics
What Is a credit card?
A card that allows you to borrow money to make purchases and pay it back later.
What does APR stand for?
Annual Percentage Rate.
What is a credit score?
A number that represents your creditworthiness.
What is one benefit of using a credit card responsibly?
Building a good credit history.
What is a credit limit?
The maximum amount of money you can borrow on a credit card.
What is interest on a credit card?
The cost of borrowing money, charged as a percentage of your balance.
Does paying your bill on time help your credit score?
Yes
What is a good habit when using a credit card?
Paying the full balance each month.
What happens if you miss a credit card payment?
You may be charged a late fee and your credit score can decrease.
What is a late fee?
A charge for not making your payment on time.
What is credit utilization?
The percentage of your available credit that you are using.
What should you do before applying for a credit card?
Check your budget and understand the terms and fees.
What is the difference between a debit card and a credit card?
A debit card uses your own money from a bank account, while a credit card borrows money you must repay.
What is a grace period?
The time you have to pay your balance in full without being charged interest.
Why is high credit utilization bad?
It shows lenders you may rely too much on credit, which can lower your score.
Why should you avoid maxing out your credit card?
It increases debt and lowers your credit score.
What is a credit limit?
The maximum amount of money you can borrow on a credit card.
Why is carrying a balance expensive?
Because interest builds over time, increasing the total amount you owe.
Name one major factor that affects your credit score.
Payment history, credit utilization, length of credit history, new credit, or credit mix.
What is one strategy to avoid credit card debt long-term?
Spend only what you can afford to pay off in full each month and track your spending.