Your 1st Credit Card

1. Relating to credit, APR stands for:

The month of April.

The annual percentage rate.

The annual per-year rebate.

The adult practice rate.

APR stands for Annual Percentage Rate, which is a measure of the cost of credit expressed as a yearly interest rate. It includes both the interest rate and any additional fees or charges associated with the loan. The APR allows borrowers to compare the costs of different loans or credit options and make informed decisions. It is an important factor to consider when taking out a loan or using credit, as it gives a more accurate representation of the total cost of borrowing.

Explanation

APR stands for Annual Percentage Rate, which is a measure of the cost of credit expressed as a yearly interest rate. It includes both the interest rate and any additional fees or charges associated with the loan. The APR allows borrowers to compare the costs of different loans or credit options and make informed decisions. It is an important factor to consider when taking out a loan or using credit, as it gives a more accurate representation of the total cost of borrowing.

2. Using a credit card will affect my credit score.

True

False

Using a credit card and paying it back over time establishes credit history and will help build your credit score if it is paid back responsibly.

Explanation

Using a credit card and paying it back over time establishes credit history and will help build your credit score if it is paid back responsibly.

3. Choosing the right credit card is an important decision that can affect your credit for years to come.

True

False

Choosing to have or not to have a credit card is a big decision, and choosing the right card for your circumstances is also a big step! Consider all your options!

Explanation

Choosing to have or not to have a credit card is a big decision, and choosing the right card for your circumstances is also a big step! Consider all your options!

4. An annual fee for a credit card:

Is standard with any type of credit card you apply for.

Is a special fee if you do not use your credit card for one annual year.

Is a fee you pay each year to have the particular credit card.

Is not a fee connected with student accounts.

The correct answer is "Is a fee you pay each year to have the particular credit card." This explanation correctly identifies that an annual fee for a credit card is a payment made by the cardholder every year in order to maintain possession of the specific credit card. This fee is separate from any other charges or interest rates associated with using the card.

Explanation

The correct answer is "Is a fee you pay each year to have the particular credit card." This explanation correctly identifies that an annual fee for a credit card is a payment made by the cardholder every year in order to maintain possession of the specific credit card. This fee is separate from any other charges or interest rates associated with using the card.

5. With a secured credit card:

The bank charges you $25 per month to have the card.

You must have an authorized user co-sign for your collateral.

You must have a student account to hold as collateral.

You have a savings deposit on hold as collateral.

The correct answer is that you have a savings deposit on hold as collateral. This means that in order to obtain a secured credit card, you must have a savings deposit that is held by the bank as collateral. This deposit acts as security for the credit card issuer, ensuring that they have a means to recover any unpaid debts if you fail to make your payments. By having a savings deposit on hold as collateral, you are essentially borrowing against your own money and building credit as you make timely payments on the card.

Explanation

The correct answer is that you have a savings deposit on hold as collateral. This means that in order to obtain a secured credit card, you must have a savings deposit that is held by the bank as collateral. This deposit acts as security for the credit card issuer, ensuring that they have a means to recover any unpaid debts if you fail to make your payments. By having a savings deposit on hold as collateral, you are essentially borrowing against your own money and building credit as you make timely payments on the card.

6. The HIGHER the APR, the better the credit card value.

True

False

You should weigh the APR wth other rewards offered, but usually the higher the APR is the less of a "deal" the card is.

Explanation

You should weigh the APR wth other rewards offered, but usually the higher the APR is the less of a "deal" the card is.

7. The bonus of getting 5% cash back:

Means you don't have to pay 5% of your credit card bill each month.

Means you earn 5% cash back on your credit card statement for certain purchases.

Means you get 5% cash back at the end of the year from the credit card company.

Means you will have to pay an annual fee to have the credit card.

This answer correctly explains that the bonus of getting 5% cash back means that you earn 5% cash back on your credit card statement for certain purchases. This means that for certain eligible purchases, you will receive a percentage of the purchase amount back as cash rewards on your credit card statement.

Explanation

This answer correctly explains that the bonus of getting 5% cash back means that you earn 5% cash back on your credit card statement for certain purchases. This means that for certain eligible purchases, you will receive a percentage of the purchase amount back as cash rewards on your credit card statement.

8. Zero percent on a balance transfer means:

You do not pay any interest on a credit card balance you transfer from another credit card.

There is not a balance due for that month on your credit card statement.

You will be charged a fee of zero dollars for that particular month of purchases.

You made zero purchases on your credit card for the month.

Zero percent on a balance transfer means that you do not have to pay any interest on the credit card balance that you transfer from another credit card. This is a beneficial feature as it allows you to save money on interest charges and potentially pay off your debt faster. It is important to note that this zero percent interest rate is usually for a limited period of time, after which the interest rate may increase.

Explanation

Zero percent on a balance transfer means that you do not have to pay any interest on the credit card balance that you transfer from another credit card. This is a beneficial feature as it allows you to save money on interest charges and potentially pay off your debt faster. It is important to note that this zero percent interest rate is usually for a limited period of time, after which the interest rate may increase.

9. If you are over 21 years of age, you cannot be an authorized user on your parents' credit card.

True

False

There is no age limit to be an authorized user on another's account.

Explanation

There is no age limit to be an authorized user on another's account.

10. A secured credit card (check as many answers that are true):

Has a definite credit limit.

Always has an annual fee.

Has a low APR.

Has collateral.

A secured credit card is a type of credit card that requires collateral, typically in the form of a cash deposit, which serves as a credit limit. This means that the cardholder can only spend up to the amount of the deposit. Therefore, the statement "Has a definite credit limit" is true. However, it is not always the case that a secured credit card has an annual fee or a low APR. These factors can vary depending on the specific credit card issuer and their terms and conditions.

Explanation

A secured credit card is a type of credit card that requires collateral, typically in the form of a cash deposit, which serves as a credit limit. This means that the cardholder can only spend up to the amount of the deposit. Therefore, the statement "Has a definite credit limit" is true. However, it is not always the case that a secured credit card has an annual fee or a low APR. These factors can vary depending on the specific credit card issuer and their terms and conditions.

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