Question

credit card basics quiz

1. what does it mean to pay with a credit card?

a) you pay directly from your checking account
b) you use borrowed money from the bank
c) you pay with money youve already saved
d) you use cash instead of a card

Explanation:

A credit card allows the cardholder to borrow money from the issuing bank up to a certain limit. When using a credit card for payment, it is essentially using borrowed funds from the bank (subject to repayment with possible interest). Option A refers to a debit - card - like function (direct from checking account). Option C is more accurate as credit cards are about borrowing from the bank. Option D is incorrect as it's about using a card (credit card in this context, not cash). Option B is also a valid description as borrowing from the bank is involved.

Answer:

B. You use borrowed money from the bank, C. You pay with money you've already saved (Note: There is an error in the options. The correct understanding is that when using a credit card, you are borrowing from the bank. If we assume the options are as they are, B and C could be considered. But in a proper credit - card - function context, B is more accurate as credit - card payments are about borrowing (up to a limit) from the bank. However, if there was a mis - optioning and C was a wrong inclusion, B is the answer. If we consider that sometimes people might pay off credit - card bills with saved money (but that's a post - payment action), but the act of paying with the credit card is borrowing. So, ideally, B is the answer.)