Module 3.3.1: Credit cards case study and critical thought quiz

Help Frank, a freshman college student with his first credit card, make wise credit decisions. Plus, five other interesting credit questions that will help you think critically about credit cards.

1. FRANK’S CREDIT CARD CASE:

Frank is a freshman college student. He is surviving on ramen noodles (e.g., he has low income and little spending money). He is excited that he just received his first credit card and is looking forward to eating better and dining out with friends. Frank’s credit limit is $1500; his card has an introductory 0.00% APR for 12 months, after which it increases to 22.74%.

Which of the following is the best advice for Frank?​

 
 
 

2. FRANK’S CREDIT CARD CASE:

Frank is a freshman college student. He is surviving on ramen noodles (e.g., he has low income and little spending money). He is excited that he just received his first credit card and is looking forward to eating better and dining out with friends. Frank’s credit limit is $1500; his card has an introductory 0.00% APR for 12 months, after which it increases to 22.74%.

Since Frank’s APR is 0.00% for 12 months, this means he can make absolutely no payments for an entire year.​

 
 

3. FRANK’S CREDIT CARD CASE:

Frank is a freshman college student. He is surviving on ramen noodles (e.g., he has low income and little spending money). He is excited that he just received his first credit card and is looking forward to eating better and dining out with friends. Frank’s credit limit is $1500; his card has an introductory 0.00% APR for 12 months, after which it increases to 22.74%.

After Frank’s introductory APR ends, if he carries a balance of $1000 for a month, about how much interest will accrue during that month?​

 
 
 
 

4. FRANK’S CREDIT CARD CASE:

Frank is a freshman college student. He is surviving on ramen noodles (e.g., he has low income and little spending money). He is excited that he just received his first credit card and is looking forward to eating better and dining out with friends. Frank’s credit limit is $1500; his card has an introductory 0.00% APR for 12 months, after which it increases to 22.74%.

Which of the following will hurt Frank’s credit score?

 
 
 
 

5. FRANK’S CREDIT CARD CASE:

Frank is a freshman college student. He is surviving on ramen noodles (e.g., he has low income and little spending money). He is excited that he just received his first credit card and is looking forward to eating better and dining out with friends. Frank’s credit limit is $1500; his card has an introductory 0.00% APR for 12 months, after which it increases to 22.74%.

Which of the following is not a good financial practice in Frank’s situation?​

 
 
 
 
 
 

6. When should a chargeback (a.k.a., transaction dispute) be used?

 
 
 
 

7. Which of the following is not correct about credit cards?

 
 
 
 
 
 

8. What is the best way to use a credit card without ever paying interest?

 
 
 
 
 
 

9. Credit cards can be very dangerous and can be a slippery slope.

 
 

10. Having over 15 credit cards is very bad for your credit score.

 
 


By Richard Thripp