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Quiz: 10 must-know credit card FACTS
Do you know your credit card limit from the outstanding balance on your card?
Do you know why you should pay your entire outstanding balance every month before the due date?
Do you know the pros and cons of availing a balance transfer on your credit card?
Here's a quiz on credit card designed to test your basics:
1. How does the bank decide credit limit on your credit card?
a. Based on your ability to handle debt
b. Uniform for all individuals depending on the age
c. Depends on how much you ask for at first place
The correct answer is a. The credit limit is the maximum amount you can spend or borrow using your credit card. This limit is determined by various personal details like your income, source of income etc. The credit limit is normally raised or lowered depending on your previous year's track record in terms of spending and repayment.
Courtesy: www.investment-mantra.in
Quiz: 10 must-know credit card FACTS
2. Is paying the minimum monthly payment on credit card amount outstanding a good option?
a. Yes as you need to pay less amount than what you shopped for
b. There is no such facility available with credit cards
c. Not a good idea as your debt keeps on piling up
The correct answer is c. Minimum payments are a percentage of the outstanding monthly balance. Typically they cover the interest and only about 1 per cent of the principal. This is the least amount of payment the credit card company will accept and allows the user to string out payments. You can make a larger payment and in fact, it is much smarter to pay the balance in full every month. That way you build good credit and avoid paying interest. It also keeps you out of debt. Paying only the minimum means you will pay a lot of interest and take years to pay off the debt.
Quiz: 10 must-know credit card FACTS
3. What if your credit card is lost or stolen?
a. Call customer care of bank and block your card immediately
b. No action is required for the same
c. None of above
The correct answer is a. If you happen to lose your card, report it immediately to your credit card companies 24-hour call centre. After reporting the loss, you carry zero liability on any fraudulent transactions on your card. This will help the concerned bank to immediately block all transactions on your card and initiate the process to deliver a new card to you within the next three business days. Any fraudulent transactions after reporting the loss will be borne by bank. If you happen to recover the card after having reported it lost, please do not use it. Cut it into four pieces, cut it especially through the magnetic strip at least once, and return it to bank.
Quiz: 10 must-know credit card FACTS
4. What are the advantages of using a credit card?
a. Cash is always riskier to carry, besides the limit to the amount you can carry in your wallet
b. Entitle you to other benefit like discount at shops, restaurants and airline tickets and a global card assures you of spending in any currency and settling your dues in your home currency.
c. All of above
The correct answer is c. Credit card can make your life lot easier given that you use it responsibly and smartly.
Quiz: 10 must-know credit card FACTS
5. Is it advisable to use the cash advance facility?
a. Cash advance facility should be used only when absolutely necessary as interest rate is very high
b. It should be used frequently
c. There is no such facility available
The correct answer is a. Using the cash advance feature on your credit card may be quite costly. The card issuer generally levies either a flat fee on each transaction or a portion of the sum withdrawn. It normally ranges from 1 per cent to 4 per cent. Besides the bank owning the ATM will also levy a fee for utilising a credit card to withdraw money. However this will vary. Another drawback of cash advances is they do not have any grace period. It means you are charged the interest right from the instant you withdraw money. However there are very few issuers who let you take cash advances without any fee.
Quiz: 10 must-know credit card FACTS
6. Does the add-on card have a separate credit limit?
a. No, the add-on card member shares the same credit limit as assigned to the primary card member
b. Yes it has a separate credit limit
c. There is no such facility available
The correct answer is a. No, the add-on card member shares the same credit limit as assigned to the primary card member.
Quiz: 10 must-know credit card FACTS
7. What factors do you need to consider while selecting a credit card?
a. Joining and annual fees and credit limit provided
b. The interest rate levied by banks whenever you revolve your outstanding balance into your next billing cycle and identify a card suiting your needs & where you spend the most
c. All of above
The correct answer is c. You should opt for credit card only if it suits your needs and lifestyle.
Quiz: 10 must-know credit card FACTS
8. What is balance transfer on credit cards?
a. Process of transferring the existing outstanding balance or debt from one credit card to another credit card
b. Outstanding remaining on the card
c. None of above
The correct answer is a. Credit card companies continuously give offers to lure new customers from their existing bank. One such offer is the balance transfer facility. Here, a person is allowed to shift the outstanding amount on one credit card to another. A word of caution since in some banks, the rate of interest may be zero in the initial months and they might be higher than your existing lender in the later months. In such cases, remember that the interim relief is just eyewash. If you are not confident of the repayment abilities, then stay away from such offers.
Quiz: 10 must-know credit card FACTS
9. Why giving a close look to credit card statement is significant?
a. To make sure there is no extra charge apart from your usage are levied and look for exact billing amount and due date
b. It is not important as you already know how much you have spent
c. None of above
The correct answer is a. Your credit card statement will provide you wealth of information and if you know and understand all the individual categories such as current balance, total credit limit, previous balance, minimum payment due and due date, you will be able to interpret your statement a lot easier.
Quiz: 10 must-know credit card FACTS
10. What are things you should consider while doing a purchase through credit card?
a. Make wise decisions about purchasing items you need versus those you simply want and let your creditor know in advance if you won't be able to make your monthly payment on time
b. Negotiate a lower interest rate and try to stay well stay within your credit limit
c. All of above
The correct answer is c. Make sure you make use of your credit only to the extent you can afford to pay out. Otherwise you can pile on a large debt and that too at a high interest rate.