Credit Cards 101
What does "APR" stand for?
Annual Percentage Rate
What happens if you only pay the minimum payment?
You pay more interest and stay in debt longer
Name one type of loan.
Auto, student, personal, mortgage
What is a credit score?
A number that shows how trustworthy you are with borrowed money
You lose your credit card. What should you do first?
Lock or Freeze your card
What is the best way to avoid paying interest on a credit card?
Pay the full balance
True or False: Interest on credit cards is charged daily.
True
True or false: Your credit score impacts your loan amount and APR
True
What is the biggest factor in your credit score?
Payment history
You want a card with rewards but plan to pay in full. What feature matters most?
Rewards rate (cash back, points)
Name one common credit card fee.
Annual fee, late fee, foreign transaction fee, cash advance fee, etc.
True or False: "0% APR" will help you save money
False
What is one benefit of taking out a loan?
You can buy something now and pay over time.
What is a good credit utilization percentage?
Under 30%
You carry a balance often. What feature matters most?
What is a credit utilization
The percentage of your credit limit you're using
Which repayment method saves the most money: Snowball or Avalanche?
Avalanche (pays highest APR first)
What is one risk of taking out a loan?
You pay interest, increasing total cost
You cannot pay and end up in endless debt
How does a higher credit score affect your loan interest rate?
Higher score = lower interest rates
You're choosing between two car loans. One has a lower APR but a shorter term (higher payment per month), the other has a higher APR and a longer term (less $ paid per month). Which costs less overall?
Why is a card with no annual fee often better for beginners?
If your APR is 25%, what does that mean?
You pay 25% interest per year on unpaid balances
How can you reduce the total interest paid on a loan?
Pay extra, choose a shorter term, improve your credit, make a larger down payment
Name two habits that build good credit.
Paying on time, low utilization, keeping accounts open, etc.
Your credit score drops because you closed your oldest credit card. Why?
It shortened your credit history.