Credit Cards
What is a credit card?
A plastic card that allows you to borrow money up to a certain limit.
If you owe 20% interest on a 10$ purchase how much do you owe?
12$
What type of card lets you borrow money, and you have to pay it back at the end of the month?
Credit card
What is one danger of overspending with a credit card?
What is a grace period on a credit card?
The time frame which you can pay your balance in full without having interest charges.
What does APR stand for in credit cards?
Annual Percentage Rate
1400
What type of card is designed to build credit?
Secured Credit Card
What happens if you make only the minimum payments?
Lots of interest will build up and you get little credit.
How long is a grace period last typically?
21 to 25 days.
What is the difference between principal and interest?
Principal is the original amount borrowed, interest is the cost of borrowing that amount.
If you owe 25% interest on a 660$ purchase how much do you owe?
825$
Allows you to access funds directly from your bank
What is a impact of late payments on your credit score?
Lowers credit score.
Wat must you do to fully take advantange of the grace period given to you?
Pay your balance in full during the grace period.
What happens if you miss a credit card payment?
You will get late fees, and it will damage your credit score.
If you owe 2% interest on a 240$ item how much do you owe?
242$
What are some features of some debit cards that allow them to overdraw there accounts up toa certain limit?
Overdraft protection
What is the term for the cycle of debt that can occur when using credit cards to pay off existing debt you have already collected.
Debt spiral or credit card debt cycle.
What happens if you dont pay off your balance from the month before?
You wont be offered a grace period, and interest will accumlulate
Why is it dangerous to finance long term with credit cards?
Credit cards have high interest rates, leading to greater overall debt.
If you owe .55% interest on a 514$ item how much do you owe?
516.83$
What is the minimum payment on a credit card?
The smallest amount you are required to pay each month, it builds little credit.
What happens if you exceed your credit limit and what are the potential consquences?
You may incur overlimit fees and have transactions declined, which can lower credit score.
How can missing a payment affect your grace period?
Losing the grace period and increased intrest.