Don’t use the credit card at all!
No, Frank needs to use the credit card and have a statement balance each month to build the Payment History portion of his credit report, which is the largest component of his credit score (35%).

Frank should use the credit card carefully. He can use it to build his credit, but should not spend too much more than he can repay, particularly toward the end of the 0.00% APR period.
This is true. Using the credit line for important purchases that help Fred’s health (e.g., fruits and vegetables instead of ramen noodles) or academic performance may be worthwhile, even if he has to spend beyond his means. However, as the 0.00% APR period draws to a close, efforts should be focused on repaying the balance.

Paying no interest for a year is a great deal; Frank should have fun with the money and not worry, since he will surely have a job or money saved by the end of the year, and if not, he can just carry a balance at 22.74% interest for a little while.
This is a bad idea because being overly optimistic about future earnings results in many people being unable to repay credit card debt. Frank should not get started down the slippery slope of spending beyond his means.

True
Incorrect.

False
Correct. Even though Frank has a promotional APR, he will still have to pay the minimum payment each month, which is often $25.00. If he does not, the promotional APR may be void and a penalty APR of as high as 29.99% might begin immediately.

$4.37
Incorrect. Try dividing .2274 by 12 months and then multiplying it by the balance.

$18.95
Correct! In one month, about $18.95 of interest would accrue on $1000 at 22.74% APR.

$227.40
Incorrect. You are thinking of an entire year’s interest.

$1018.95
Incorrect. The question asks for how much interest would accrue, which excludes the principle amount ($1000).

Carrying a balance
Carrying a balance, by itself, has no impact on credit score.

Not using the card at all
Not using the card does not hurt your credit score. It does prevent you from building up a good monthly payment history, however.

Carrying a $1200 balance from month to month
Correct! This will hurt the “utilization” component of Frank’s credit score. Keeping your utilization under 30% is ideal. Utilization is typically reported only once per month, based on the statement balance.

Making only the minimum payment
By itself, making only the minimum payment has no negative impact on your credit score.

Using a budget to manage spending
Incorrect. Budgeting helps you understand and monitor your spending.

Frequently checking activity and pending charges on the card issuer’s website
Incorrect. Keeping up with your card activity is a good idea.

Only using the credit card when Frank has enough money saved to pay for the charges
Incorrect. Only buying on credit when you have enough money saved is an excellent practice.

Withdrawing cash against his credit line at an ATM to help build his credit
Correct! Using your cash advance credit line incurs high fees and interest rates, and does not help your credit.

Using virtual account numbers (for security) when making online purchases
Incorrect. Using virtual account numbers improves your online shopping security.

Carrying his credit card with him, everywhere he goes
Incorrect. Carrying your credit card in your wallet makes sense, typically.

When you need extra spending money
Incorrect. Purposely initiating frivolous chargebacks may be a financial crime, and is certainly a violation of your cardmember agreement.

When a merchant has billed you without authorization or delivered goods or a service that are faulty or significantly not as described
Correct! The chargeback is a critical consumer protection and one of the greatest benefits of credit cards. (And, for merchants, one of the biggest liabilities!)

When you find another merchant is offering the same item for a lower price
Incorrect. The merchant may offer retroactive price-match, or your card issuer may offer price-drop protection, but neither of these are related to chargebacks.

When you left your credit card plugged into the battery charger for too long and need to release excess voltage from the EMV chip
Incorrect. Instead of swiping, you insert your EMV “chip” card into the terminal to make a payment. This has nothing to do with chargebacks, and credit cards do not require electrical power.

Credit cards often offer valuable rewards and signup bonuses
Incorrect. This is true.

You can get through life without ever using a credit card
Incorrect. This is true. You could use bank debit cards, pay with cash, or buy prepaid debit cards. There are a few services that may require credit cards, but there is always another way.

Having your credit card stolen is better than having your debit card stolen
Incorrect. This is true. When a credit card is stolen, you are open to LESS liability than when a debit card is stolen. You should always report a lost or stolen card to the card issuer as soon as possible.

Credit card issuers are benevolent and provide their services strictly for the benefit of the public
Correct! This is false. Credit card issuers make billions off customers who carry balances and pay interest. They also make money off interchange fees (“swipe” fees).

Having a credit card and making on-time payments helps build your credit report and improves your credit score
Incorrect. This is true.

Credit cards offer lower interest rates than payday loans
Incorrect. This is true.

Get a credit card, rack up a lot of charges, and never pay the balance or interest
Incorrect. This will ruin your credit and may lead to the card issuer pursuing legal action, such as a judgment to garnish your wages.

Each month, pay the statement balance in full before the payment due date
Correct! If you do this every month, you’ll never pay a cent of interest.

Get your mom to co-sign on the card and then leave her stuck with the bill
Incorrect. This is a horrible way to treat your mom.

Cross out sections of the credit card agreement pertaining to interest. Then, sign and return the agreement to the card issuer. If they accept it, you never have to pay interest and can sue them if they try to collect it.
Incorrect. While such a case may have legal merit, you can expect a lot of issues and resistance with this strategy.

Steal people’s credit cards and rack up charges. You are just sticking it to the man, since the credit card issuer is liable—not the card holder.
Incorrect. You would be committing felony crimes by stealing and using others’ credit cards.

Get a credit card with a 0.00% promotional APR, and then do a balance transfer to another card with a 0.00% APR after the promotion expires. Rinse and repeat.
Incorrect. While this is not illegal and has some merits, you still have to pay the balance eventually, and you will incur balance transfer fees each time you transfer the balance, which are typically 3–4% of the entire balance. (Occasionally, Chase Bank still offers no-fee balance transfers with 0.00% APR for 12 or more months through their “Slate” card.)

True
Correct. Many people end up deep in debt with no way out due to credit cards. Reflection and self-knowledge is important. Refusing to have or use credit cards may be a sophisticated and reasonable decision.

False
Incorrect. While some people may never have issues with responsible credit card use, they certainly are not representative of everyone.

True
Incorrect.

False
Correct! Having more credit cards is good for many factors of your report, such as payment history and average account age. While credit inquiries hurt your credit score, this effect largely disappears after 6 months, and completely disappears after 2 years.