Question

activity: fine print: schumer box
each of the factors you saw in the video are provided in something called a schumer box, which is
meant as a written summary of the most important terms and conditions of a specific credit card
follow the directions on the worksheet to complete this activity
exit ticket

1. which statement is true of both debit and credit cards?

a both can trap you in an endless cycle of debt if youre not careful
b. both allow you to make purchases in a store or online
c both typically have interest rates between 10 - 30%
d. both require you to pay a minimum monthly payment when your bill arrives.

1. felix opens a credit card with no annual fee, so he assumes that using the credit card

regularly will be absolutely free for the next two years while he finishes grad school. why is
his assumption incorrect?
a unless he pays the whole bill every month, he will pay interest according to his apr
b. he will automatically pay penalty fees if he uses his credit card for more than 3
consecutive months
c if his grace period is any longer than 10 days, he will have to pay fees
d. he will need to pay a separate student fee because he is still in grad school

1. which statement best describes a schumer box?

a the final calculation of how much you owe on your credit card bill each month
b. a standardized way of presenting the key terms of your credit card agreement
c. a legal document stating that youre behind on your credit card payments
d. the outstanding balance on your credit card once youve made your recent paym

Explanation:

1. Debit and Credit Cards Functionality:

Debit cards use funds from your bank account, and credit cards use borrowed money. But both are payment tools. You can use them to make purchases in - store or online.

• Option A: Only credit cards can lead to a debt cycle as they are borrowed money. Debit cards use your own money.
• Option C: Debit cards do not have interest rates (except in some overdraft cases which is not the norm).
• Option D: Only credit cards require a minimum monthly payment.

1. Credit Card Interest and Grace Period:

The grace period is the time between the end of the billing cycle and when interest starts to accrue. If you don't pay the full balance, you pay interest.

• Option B: There is no such rule about 3 consecutive months for penalty fees (unless related to late payments, but the question is about interest).
• Option C: Grace period length is not related to being in grad school in terms of incurring fees (in the context of the problem).
• Option D: There is no mention of a student fee in the problem's context.

1. Schumer Box Definition:

The Schumer Box is a standardized way (required by law in the US) to present key terms like interest rates, fees, etc. of a credit - card agreement.

• Option A: It is not about calculating the amount you owe.
• Option C: It is not a legal document stating you are behind on payments.
• Option D: It is not about the outstanding balance after payment.

Answer:

1. B. Both allow you to make purchases in a store or online
2. A. Unless he pays the whole bill every month, he will pay interest according to his APR
3. B. A standardized way of presenting the key terms of your credit card agreement