Credit Card Basics
What is a credit card?
A card that lets you borrow money to make purchases and pay it back later.
Is paying your credit card bill on time a good or risky choice?
A good choice.
What happens if you only pay the minimum balance?
You will owe money longer and pay more because of interest.
What does it mean to be in debt?
Owing money that needs to be paid back.
You buy something with a credit card but don’t pay it back right away. What happens?
You will owe the money and may be charged interest.
What is a credit limit?
The maximum amount of money you are allowed to borrow on the card.
Why is using a credit card for things you don’t need risky?
It can lead to debt and make it harder to pay the money back.
How does interest affect the money you owe?
It adds extra money to your balance over time.
How can using a credit card put someone into debt?
By spending more money than they can afford to pay back.
What is one smart way to avoid credit card debt?
Only spend what you can pay back and pay the bill on time.
Why does a credit card not mean “free money”?
Because the money must be paid back, often with interest.
Why is letting someone else use your credit card a bad idea?
You are responsible for the charges, even if they promise to pay you back.
Why does debt grow faster when interest is added?
Because interest is charged on the money you still owe.
Why can debt be stressful or hard to get out of?
Because interest increases what you owe and payments can pile up.
Why is it important to only spend what you can pay back?
To avoid debt and extra interest charges.
What happens if you try to spend more than your credit limit?
The purchase may be denied, or you could be charged fees.
Why is paying more than the minimum balance a smart choice?
It helps you get out of debt faster and pay less interest.
When does interest usually start getting added to your balance?
When you don’t pay the full balance by the due date.
How can debt affect your future choices?
It can limit what you can afford and cause financial stress.
You want something expensive but don’t have the money. What is a smarter choice than using a credit card?
Save up, wait, or choose a cheaper option.
Why do credit card companies give people limits instead of unlimited spending?
To reduce risk and make sure people can pay the money back.
Why can using a credit card for wants instead of needs be risky?
It can lead to debt for things that are not important or necessary.
Why does carrying a balance for a long time cost more money?
Because interest keeps adding to what you owe.
Why is it harder to pay off debt when you keep adding new charges?
Because you owe more money and interest keeps increasing.
Someone uses a credit card wisely. What are two smart habits they might have?
Paying on time and only spending what they can pay back.