Question

what is one characteristic of open - end credit?
a
a down payment must be made before receiving the loan
b
individuals are allowed to borrow an unlimited amount of money as long as they pay it back
c
credit is extended in advance so the borrower does not have to apply for credit each time credit is desired
d
payments are equal and are required on a regular basis
question 4
how can a cardholder avoid paying interest on a credit card?
a
pay the minimum balance every month
b
interest is always paid on a credit card
c
only use a credit card for balance transfers
d
pay the balance in full every month
question 5
which of the following is an advantage to using a credit card?
a
credit cards eliminate the need for savings
b
credit cards are useful for emergencies
c
paying high interest on account balances
d
its a good way to get cash from an atm

Explanation:

Question about open - end credit:

• Option A: Down payments are not a characteristic of open - end credit. Open - end credit like credit cards don't require a down payment before borrowing.
• Option B: Borrowers can't borrow an unlimited amount. There is a credit limit.
• Option C: Open - end credit extends credit in advance (e.g., a credit card with a pre - approved limit), so the borrower doesn't need to re - apply each time they want to use credit (as long as they are within the limit). This is a key characteristic.
• Option D: Payments in open - end credit are not necessarily equal and regular. Minimum payments can vary, and you can pay more than the minimum.

• Option A: Paying the minimum balance will result in interest being charged on the remaining balance.
• Option B: Interest is not always paid. If you pay the full balance, you can avoid interest.
• Option C: Using a credit card for balance transfers doesn't avoid interest. In fact, balance transfers may have their own fees and interest terms.
• Option D: If a cardholder pays the balance in full every month, there is no outstanding balance on which interest can be charged.

• Option A: Credit cards do not eliminate the need for savings. Savings are still important for financial security.
• Option B: Credit cards can be useful in emergencies when you need to make a purchase and don't have cash on hand. This is a valid advantage.
• Option C: Paying high interest is a disadvantage, not an advantage.
• Option D: Getting cash from an ATM with a credit card usually incurs high fees and interest, and it's not a good or advantageous way to get cash.

Answer:

C. Credit is extended in advance so the borrower does not have to apply for credit each time credit is desired

Question about avoiding credit card interest: