Personal Finance Credit Card Pre Test

A credit card company can raise its rates as long as it provides its card holders with the terms and conditions of the credit card.

The question asks how many credit cards everyone should have. The answer options include one, two, five, and none. This suggests that there is no specific number of credit cards that everyone should have, and it can vary depending on individual circumstances and preferences. Some people may prefer to have multiple credit cards for different purposes or to maximize rewards, while others may prefer not to have any credit cards at all.

Using a credit card online is safer than using a debit card because credit cards offer better fraud protection. In case of unauthorized transactions, credit card companies usually have zero liability policies, meaning the cardholder is not responsible for any fraudulent charges. On the other hand, debit cards may have limited liability policies, and if unauthorized transactions occur, the cardholder may be liable for a certain amount of money. Furthermore, credit cards also provide an additional layer of security through virtual card numbers or two-factor authentication, making them a more secure option for online transactions.

Opening a credit card to receive a promotional item is considered foolish because it implies making a financial decision based on short-term gratification rather than considering the long-term consequences. Opening a credit card solely for a promotional item may lead to accumulating unnecessary debt and potentially damaging one's credit score. It is generally advisable to carefully evaluate the terms and benefits of a credit card before applying, rather than being swayed by temporary incentives.