Definitions
A card that allows you to spend money by drawing directly from your checking or savings account.
What is a Debit Card?
Which card, debit, credit, or charge requires a full payment each month?
Charge card.
If you want to stick to a strict budget, which card might be safer to use?
Debit card.
Do debit cards charge interest?
No, because you’re using your own money.
Can using a debit card improve your credit score?
No, because debit card usage does not get reported to credit bureaus.
A card that allows you to borrow money from a credit issuer up to a certain limit to make purchases.
What is a Credit Card?
What is a potential benefit of using a debit card?
You can only spend what's in your bank account.
What happens if you spend more than your credit limit?
You may incur an over-limit fee, and your card could be declined.
What is a consequence of not paying your credit card bill on time?
You’ll be charged interest on the unpaid balance.
Your credit score will go down.
Name one fact about a credit score?
Answers may vary.
A fee charged when you spend more money than is available in your debit account.
What is an overdraft fee?
What is a downside of using a credit card?
You may incur interest if you don’t pay off your balance in full.
Can using a debit card help you avoid debt?
Yes, because it only allows you to spend money you already have.
What happens if you withdraw money from an ATM that's not a part of your bank's network?
You will be charged an out of network fee.
How can using a credit card responsibly improve your credit score?
By making on-time payments and keeping balances low relative to your credit limit.
The maximum amount you can borrow on a credit card.
What is a credit limit?
Name one advantage of using a credit card over a debit card.
Building credit history and score. You don't have to pay for the purchase right away.
Why might someone choose a credit card for large purchases?
To spread payments over time or to earn rewards. They don't have enough money in their bank account.
What is an annual fee on a credit card?
A yearly charge by the credit card issuer for the use of the card.
What is one negative effect on your credit score from using a credit card?
Missing payments or carrying a high balance.
What is the difference between a debit card and a credit card?
A debit card uses your own money from your account, while a credit card borrows money from a lender that you must pay back.
What is a potential downside of using a charge card?
It is typically used for specific stores or types of purchases.
What’s one strategy to avoid overspending with a credit card?
Set a budget and track your spending regularly.
How can interest fees on credit cards be avoided?
By paying your full balance early or by your next billing cycle.
Sarah has a credit score of 680. Credit scores range from 300-850. How would you rate her score? Excellent, Good, Fair, Poor, or Very Poor?
Fair