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Quizzes > Business & Finance > Finance & Economics

How Well Do You Know Credit Cards? Take the Free Quiz!

Think you can ace this quiz on credit cards? Challenge yourself now!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art credit cards coins and quiz icons on coral background for free credit card knowledge test

This credit card quiz helps you practice how to choose and use cards, with quick questions on rates, APR math, rewards, fees, and credit scores. Play to spot gaps that could cost you money and improve your next pick. Want extra practice? Try the credit report quiz and our credit score guide .

What does APR stand for on a credit card bill?
Annual Penalty Rate
Annual Percentage Rate
Annual Payment Ratio
Average Purchase Rate
APR stands for Annual Percentage Rate and represents the yearly cost of borrowing money, including any fees or additional costs. Lenders are required by law to disclose the APR to help consumers compare loan and credit card offers more easily. It includes both the interest rate and other charges you may pay to use the card. .
Which describes a grace period on a credit card?
Time frame for balance transfers
Time during which new purchases don't incur interest if paid in full by the due date
Period after a late payment when fees aren't charged
30 days before the card's anniversary
A grace period is the time when you can pay your balance in full without incurring interest on new purchases. Not all cards offer a grace period on cash advances or balance transfers. You must pay the statement balance in full by the due date to benefit from it. .
What is a credit limit on a credit card?
The minimum payment required each month
The annual fee charged for card usage
The maximum amount you can borrow on the card
The amount due after the due date
A credit limit is the maximum balance you can carry on your credit card at any time. It's determined by the card issuer based on factors like your credit history and income. Exceeding this limit can result in fees or declined transactions. .
What does minimum payment refer to on a credit card statement?
Only the interest portion of the balance
The total balance owed for the month
The amount charged for cash advances
The smallest amount you must pay by the due date to keep the account in good standing
The minimum payment is the least you must pay each billing cycle to avoid late fees and penalty APRs. Paying only the minimum will prolong repayment and increase interest costs over time. It typically includes a percentage of the balance plus any fees. .
Which describes a cash-back rewards program?
Get gift cards upon sign-up with no ongoing rewards
Accumulate hotel points redeemable for free nights
Earn a percentage of purchases back as statement credit or cash
Receive airline miles for every dollar spent
Cash-back programs reward cardholders with a percentage of their spending returned as a statement credit or deposit. These programs are simple to use since cash-back rewards can often be applied to the balance or redeemed for a check. The percentage returned varies by card and spending category. .
What is a secured credit card?
A card that offers premium rewards
A card that requires a cash deposit as collateral
A card that requires no credit check
A corporate travel card
Secured credit cards require a refundable security deposit that typically equals the credit line. They are designed for individuals building or rebuilding credit. Responsible use and on-time payments can help improve your credit score. .
Which credit score range is generally considered excellent?
300 - 579
670 - 739
580 - 669
740 - 850
Most scoring models, like FICO, categorize 740 - 850 as excellent credit. Scores in this range typically earn more favorable interest rates and terms. Maintaining low credit utilization and a consistent payment history helps achieve this. .
Which statement best distinguishes a credit card from a debit card?
A credit card lets you borrow funds up to a limit, whereas a debit card draws directly from your checking account
A debit card charges interest on purchases, but a credit card does not
Credit cards have no fees, debit cards do
Debit cards let you build credit history, credit cards do not
Credit cards allow you to borrow money up to a predetermined limit, while debit cards pull funds directly from your bank account. Credit card use impacts your credit history; debit card use generally does not. Interest is charged when you carry a balance on a credit card, but not on debit transactions. .
What does the statement balance represent on a billing statement?
The highest balance reached during the billing cycle
The current balance including pending transactions
The amount owed as of the statement closing date
The minimum payment due
The statement balance is the total you owed on your card as of the last day of your billing cycle. Paying this amount in full by the due date avoids interest on new purchases. It does not include transactions posted after the closing date. .
Which factor has the highest impact on your credit score?
Age of credit accounts
New credit inquiries
Payment history
Credit mix
Payment history accounts for about 35% of a FICO score, making it the most influential factor. Late or missed payments can significantly damage your credit rating. Consistent on-time payments help build and maintain a strong score. .
How is credit utilization ratio calculated?
Total credit inquiries divided by open accounts
Total credit card balances divided by total credit limits, expressed as a percentage
Average of balances over the past year
Number of late payments divided by total payments
Credit utilization is the ratio of your outstanding balances to your total available credit. Experts recommend keeping utilization below 30% to maintain a healthy credit score. Lower utilization signals responsible credit management. .
Which action will typically NOT incur interest charges on a credit card?
Making only the minimum payment
Carrying a balance month to month
Taking a cash advance
Paying the full statement balance by the due date
Paying the full statement balance by the due date avoids interest charges on new purchases during the next cycle. Failing to pay in full, using cash advances, or carrying a balance typically leads to interest accrual. Always review the terms to confirm grace period eligibility. .
What is a balance transfer fee?
An annual fee for having the card
A late payment charge
A fee for foreign transactions
A fee charged when moving debt from one card to another
A balance transfer fee is charged by the new card issuer for moving existing debt onto their card. This fee is typically a percentage of the amount transferred. It's important to factor this cost into your payoff strategy. .
What is a foreign transaction fee?
A fee for international ATM withdrawals only
A charge for purchases made in a foreign currency or processed outside your home country
A penalty for late payments on foreign-issued cards
An annual fee for overseas travel insurance
Foreign transaction fees are typically 1 - 3% of each purchase made abroad or in a foreign currency. Some cards waive these fees, making them ideal for travelers. Always check your card's policy before international use. .
Which card feature involves rotating bonus categories each quarter?
Quarterly category-based cash-back bonuses
Annual flat-rate rewards
Fixed airline miles per dollar
Lifetime hotel points multiplier
Some cards offer rotating categories - like groceries or gas - where you earn higher cash-back rates for a limited time each quarter. Cardholders usually must activate these categories to receive the bonus. These programs can boost rewards but require tracking. .
How long do late payments typically remain on your credit report?
10 years
Indefinitely
2 years
7 years
Late payments can stay on your credit report for up to seven years from the date of the first missed payment. Their impact on your score lessens over time, especially if you maintain good credit habits afterward. Consistent on-time payments help offset past delinquencies. .
What is a 0% introductory APR offer?
A discount on annual fees
A late fee waiver
A promotional period with no interest on purchases or balance transfers
A permanent zero-rate loan
A 0% introductory APR is a temporary promotional rate during which you pay no interest on new purchases or balance transfers. After the promotional period, the APR reverts to the card's regular rate. These offers can save money if you pay off balances before the period ends. .
Which best describes a rewards redemption partner?
An online payment processor
A credit reporting agency
A credit card issuer's customer service line
A merchant or program where you can convert points or miles into benefits
Rewards partners are airlines, hotels, or retailers where you can redeem your card's points or miles. They often offer transfer bonuses or exclusive perks. Understanding partner networks can maximize your rewards value. .
What is a penalty APR on a credit card?
The introductory rate for balance transfers
A higher interest rate applied after a late or missed payment
The standard purchase APR
The rate for foreign transactions
A penalty APR is a punitive interest rate triggered by events like late payments or returned payments. It can be significantly higher than the standard purchase APR and may remain until you make on-time payments for a specified period. The CARD Act requires issuers to disclose penalty APR triggers. .
How often can a variable APR change?
Once per year only
Monthly on the statement closing date
Only when you renew the card
Whenever the underlying index (like the prime rate) changes, subject to issuer notice requirements
Variable APRs adjust in line with an index such as the prime rate, and issuers can change your APR when the index moves. Regulations require issuers to provide notice before increasing rates. This allows your APR to go up or down over the term of the agreement. .
How does compounding frequency affect credit card interest costs?
Less frequent compounding always raises your rate
Compounding frequency has no effect on interest
More frequent compounding (e.g., daily) increases the total interest accrued
Compounding only matters for savings accounts
Compounding frequency determines how often interest is added to your balance. Daily compounding means interest is calculated and added each day, increasing the principal for the next day's calculation. This results in higher overall interest compared to monthly compounding. .
What is credit card churning?
Opening and closing cards repeatedly to earn sign-up bonuses
Consolidating balances onto one card
Making only minimum payments each month
Transferring credit limits between cards
Churning involves signing up for new credit cards to earn lucrative sign-up bonuses and then closing the accounts once the bonuses are obtained. While it can yield substantial rewards, it may hurt your credit score due to hard inquiries and reduced account age. Many issuers now limit bonus eligibility to prevent frequent churning. .
What role does a co-signer play on a credit card application?
Automatically increases the credit limit
Shares responsibility for the debt if the primary cardholder defaults
Guarantees a lower APR indefinitely
Waives all fees for the account
A co-signer agrees to repay the debt if the primary cardholder fails to do so. Their credit history and score are considered in the approval process, which can help applicants with limited or poor credit. However, co-signers take on full legal obligation for the balance. .
Which best describes a co-branded credit card?
A card that earns cash back only
A store card with no revolving credit feature
A secured card requiring a deposit
A card issued through a partnership between a financial institution and a retail or travel brand
Co-branded cards are partnerships between a credit card issuer and a merchant (like an airline or retailer). They offer specialized rewards, discounts, or perks related to the partner brand. Rewards often include bonus miles or points redeemable with the co-branded company. .
How can having a diverse credit mix impact your credit score?
It guarantees instant score boosts
It only matters if you have mortgages
It always lowers your score due to multiple accounts
It can improve your score by showing you can manage different types of credit responsibly
Credit mix accounts for about 10% of your FICO score and reflects the variety of credit accounts you manage (e.g., installment loans, revolving credit). Demonstrating responsible management across different account types can boost your creditworthiness. However, mix is only one part of the overall score calculation. .
What is the purpose of a credit card's terms and conditions document?
To legally outline rates, fees, and card usage policies
To advertise bonus offers only
To list only the phone numbers for customer service
To eliminate all interest for the first year
The terms and conditions detail the legal agreement between you and the card issuer, including interest rates, fees, payment rules, and dispute procedures. Reviewing this document helps you understand your rights and responsibilities. The CARD Act mandates clear disclosures to consumers. .
How does a FICO score differ from a VantageScore?
VantageScore ignores payment history
They use different scoring algorithms and score ranges
FICO is only for mortgages, VantageScore only for cards
FICO updates daily, VantageScore updates monthly
FICO and VantageScore are two leading credit scoring models, each with unique algorithms, criteria weights, and score ranges. While both use similar core data like payment history and utilization, they treat certain factors differently. Lenders may choose one model over the other for credit decisions. .
If you transfer a $5,000 balance at 0% APR for 12 months with a 3% fee, what is the total fee cost?
$100
$50
$200
$150
A 3% balance transfer fee on $5,000 equals $150 (0.03 × 5000). Although the promotional APR is 0%, the fee is charged upfront and is non-refundable. Always include transfer fees when calculating the break-even point of promotional offers. .
A credit card charges 20% APR compounded daily. What is the approximate daily periodic rate?
0.02%
0.5%
0.055%
1.83%
To find the daily rate, divide the APR by 365: 20% ÷ 365 ? 0.0548% per day. This daily rate is used to calculate interest on your balance each day. Compounding daily means that each day's interest becomes part of the next day's principal. .
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Study Outcomes

  1. Understand Interest Rates and APR -

    Grasp how interest rates and APR are calculated and how they affect the cost of carrying a credit card balance. Learn to compare rate structures to make informed borrowing decisions.

  2. Analyze Rewards Programs -

    Break down different credit card rewards structures like cashback, points, and travel miles. Identify which reward type aligns best with your spending habits to maximize benefits.

  3. Evaluate Credit Card Features and Fees -

    Assess common card features such as annual fees, introductory offers, and penalty fees. Determine how these elements impact overall card value and suitability.

  4. Apply Strategies to Boost Your Credit Score -

    Implement practical tips for managing balances, payment timing, and credit utilization to enhance your credit score. Recognize behaviors that can either strengthen or harm your credit history.

  5. Determine the Best Credit Card for Your Needs -

    Match card offerings to personal financial goals and lifestyle preferences by weighing factors like rewards, fees, and interest rates. Choose the right tool whether you're seeking a no-fee card or one rich in perks.

  6. Identify Common Credit Card Pitfalls -

    Recognize typical mistakes such as late payments and high utilization that can lead to fees or score drops. Learn how to avoid these pitfalls for healthier credit management.

Cheat Sheet

  1. Annual Percentage Rate (APR) -

    Your APR shows the true yearly cost of borrowing, combining interest and fees. To estimate monthly interest, use the formula: Monthly Interest = (APR / 12) × Balance, which helps you compare cards like a pro (source: CFPB.gov).

  2. Minimum Payment vs. Statement Balance -

    Paying only the minimum extends payoff time and spikes total interest: a $1,000 balance at 2% minimum can take over 20 months to clear. Aim to pay the full statement balance each month to avoid carrying costs (source: Federal Reserve).

  3. Credit Utilization Ratio -

    Calculate utilization by dividing your balance by your credit limit and multiplying by 100; experts recommend staying below 30%. Remember the "30% Rule" mnemonic to keep scores healthy and lenders happy (source: Experian).

  4. Rewards Program Types -

    Choose between flat-rate, tiered, or rotating cash-back structures: for instance, 1.5% unlimited vs. 5% on quarterly categories. Match spending habits to card perks to maximize value, and track bonus categories on your calendar (source: NerdWallet).

  5. Credit Score Factor Breakdown -

    Your FICO score hinges on Payment (35%), Utilization (30%), Length (15%), New Credit (10%) and Mix (10%). Use the mnemonic "PULNM" to recall these weights when strategizing for a higher score (source: MyFICO.com).

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