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Introducing the Credit Card: Answer Guide

Exercise 4: How can I apply for a credit card?

  • 1. How old do you have to be to apply for a credit card?
    1. 21
    2. 18
    3. 16
    4. 13
  • 2. Do you have to provide your social security number to apply for a credit card?
    1. Yes
    2. No
    3. It depends on the credit card.
  • 3. Complete the sample application at the end of this document.
    1. Check over the students’ applications.

Exercise 5: How can I avoid credit card debt?

  • 1. True or false: You cannot have a credit card without getting credit card debt.
    1. True
    2. False
  • 2. What are the causes of credit card debt?
    1. Bad spending
    2. Bad payments
    3. Bad shoes
    4. Both A and B

Exercise 6: How do rewards programs work?

  • 1. What would the approximate annual rewards be for the first year in the Capital One Cash Rewards example above?
    1. $134.25
    2. $162.38
    3. $201.38
    4. $324.76
  • Explanation This card offers 1% cash back for all purchases, plus a 50% bonus at the end of the year. Using $13,425 as the amount of money spent, we get…
  • 2. What can travel rewards be used for?
    1. Hotel rooms
    2. Airline tickets
    3. Cruises
    4. Vacation packages
    5. All of the above
  • 3. What would happen to the rewards from the sample if you also put your insurance payments on the card?
    1. It would go up because the total spent would go up.
    2. It would go down because the total spent would go up.
    3. It would go up because the total spent would go down.
    4. It would go down because the total spent would go down.
  • Explanation This card offers 1% cash back for all purchases, plus a 50% bonus at the end of the year. Using $13,425 as the amount of money spent, we get…
    • 1% of $13,425 = .01 x $13,425 = $134.25
    • 50% of $134.25 = $67.13
    • $134.25 + $67.13 = $201.38

Continue to the next section for the Quick Reference Answer Guide.

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