Which Questions Should Freya Answer Before Using A Credit Card Check All That Apply?

What should Freya think about before using her debit card?

Most banks now charge $34 overdraft fees whenever your balance dips below zero¹. So if Freya wants to buy something for $135, she needs at least that much in her account—plus whatever automatic payments might come out that same day. She should also scan her account for any pending transactions that could eat into her balance before the purchase goes through.

What should Freya really think about before swiping that debit card?

Debit cards pull money straight from your checking account, so Freya needs to be sure the purchase won’t push her balance so low it triggers overdraft fees or daily spending limits². If her bank charges a $5 monthly fee when her balance stays below $1,500, she should factor that in too—especially if it nudges her closer to zero.

What 2 advantages come with using a credit card? (Check all that apply.)

Credit cards report your payment history to Experian, Equifax, and TransUnion—so if you pay on time, your score climbs³. Many cards also give you cash back (usually 1% to 5% on purchases) or sign-up bonuses, like $200 back after spending $500 in the first three months.

What 4 questions should you ask yourself before using credit to make a purchase? (Quizlet style.)

If you don’t have the cash for a down payment, charging the rest could mean racking up high interest. For example, a $1,000 purchase at 20% APR would cost an extra $200 in interest if you only pay the minimum over a year⁴. Always compare the price tag to your monthly budget to make sure you can handle both the payment and any interest that piles up.

What counts as a good credit habit?

Sticking to just the minimum can cost you hundreds in extra interest. Take a $5,000 balance at 18% APR with a 2% minimum payment ($100): you’d be paying for over 14 years and shelling out nearly $5,000 in interest⁵. Try to pay at least double the minimum—or set up automatic payments for the full statement balance to dodge interest entirely.

What’s one big upside to having good credit?

If your score is above 740, you’ll likely qualify for a 30-year fixed mortgage with about 0.25% lower interest than if your score is below 620. That could save you roughly $40,000 on a $300,000 loan⁶. A high score also lowers rates on auto loans and credit cards, freeing up cash for other things.

What kind of info shows up on a credit report?

It includes your name, Social Security number, current and past addresses, and employers. You’ll also see open and closed accounts, payment history, credit limits, and any late payments or collections. Public records like bankruptcies and tax liens can appear, and hard inquiries from recent credit applications stick around for two years⁷.

What does it mean to be financially responsible?

Most experts suggest stashing away three to six months of living expenses in an emergency fund for surprises like medical bills or car repairs⁸. That cushion keeps you from relying on high-interest credit cards and helps you stay stable if you lose your job or face other setbacks.

Who actually looks “creditworthy”?

Lenders look at income, debt-to-income ratio, and credit score. For example, someone earning $60,000 a year with $300 in monthly debt payments and a 750 credit score has a much better shot at getting a mortgage than someone with the same income but a 600 score and $800 in monthly debt⁹.

What are 4 advantages of using credit?

Credit cards let you spread out payments for big purchases—like a $2,000 laptop—over several months. They also come with zero-liability fraud protection, so you won’t pay for unauthorized charges¹⁰. Many cards offer cash back or travel points, and using a card instead of cash makes budgeting and tracking expenses way easier.

What’s the downside of credit cards?

Carrying a $3,000 balance at 22% APR could cost about $660 in interest over a year if you only pay the minimum¹¹. Annual fees, late payment fees ($30–$40), and balance transfer fees pile up fast. Miss a payment, and your credit score takes a hit—making future borrowing more expensive.

Are credit cards good or bad?

Used wisely, cards help build credit and come with protections and rewards. But if you carry balances and only pay the minimum, the interest can quickly outweigh any rewards and wreck your finances¹². The best move? Always pay the full statement balance each month to avoid interest and stay in control of your spending.

What are the 5 C’s of credit?

Capacity checks if you can repay debt based on income and expenses. Capital refers to your net worth or savings cushion. Collateral is an asset you pledge for a loan, like a car for an auto loan. Conditions look at economic factors like interest rates and job market trends. Character reflects your credit history and payment reliability¹³.

Who can request to see your credit report? (Give 5 examples.)

Mortgage lenders pull your report before approving a home loan. Landlords check it to gauge rental risk, and utility companies use it to decide if they need a deposit. Insurance companies review credit-based insurance scores to set premiums, and some employers run credit checks (with your consent) as part of background screening¹⁴.

What’s an example of using credit?

Using credit for these repairs lets you get back on the road while spreading the $500 cost over time. If you pay the balance in full during the grace period, you avoid interest entirely. But if you carry a balance at 24% APR, that $500 could cost an extra $100 in interest over a year if you only pay the minimum¹⁵.

Sources:

1. Consumer Financial Protection Bureau, Overdraft and NSF fee data as of 2026
2. Federal Deposit Insurance Corporation, Bank fee comparisons 2025
3. Experian, How credit cards build credit history
4. myFICO, Credit card interest cost calculator
5. Consumer Reports, Credit card payment impact analysis 2026
6. Bankrate, Mortgage rate differences by credit score
7. Annual Credit Report, Credit report contents
8. NerdWallet, Emergency fund guidelines
9. Credit Karma, Creditworthiness factors
10. NerdWallet, Credit card advantages and disadvantages
11. Federal Reserve, Credit card protections and fees
12. ValuePenguin, Credit card debt cost analysis
13. CreditCards.com, Credit card pros and cons
14. myFICO, Who can access your credit report
15. Experian, Using credit for repairs and purchases