Credit Card Trivia quiz with answers

Credit Card Quiz:

Question: What is a credit card?
(a) A form of personal identification
(b) A prepaid card with a fixed spending limit
(c) A card issued by a financial institution that allows users to borrow money to make purchases
(d) A loyalty card used for earning rewards at specific stores

Answer. (c)

Question: What is the term for the practice of offering credit cards to high-risk individuals with poor credit without fully disclosing terms and fees?
(a) Responsible lending
(b) Subprime lending
(c) Transparent lending
(d) Prime lending

Answer. (b)

Question: What was the original purpose behind introducing credit cards?
(a) To encourage people to spend beyond their means
(b) To replace cash transactions entirely
(c) To provide convenient access to short-term credit for purchases
(d) To discourage consumer borrowing

Answer. (c)

Question: Which practice was a major controversy associated with credit card companies in the past?
(a) Offering generous rewards to cardholders
(b) Implementing unfair and hidden fees
(c) Lowering interest rates to attract customers
(d) Providing excellent customer service

Answer. (b)

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Question: What is the key difference between a credit card and a debit card?
(a) A credit card has no spending limit
(b) A debit card requires a PIN to make purchases
(c) A credit card is linked to a line of credit, while a debit card is linked to a bank account.
(d) A debit card offers cashback rewards on all purchases

Answer. (c)

Question: What is a potential disadvantage of carrying a high credit card balance?
(a) It improves your credit utilization ratio.
(b) It helps boost your credit score.
(c) It has no impact on your financial situation.
(d) It can lead to accumulating high-interest debt.

Answer. (d)

Question: Which feature is often associated with premium or top-tier credit cards?
(a) No annual fees
(b) Low credit limits
(c) Limited acceptance at merchants
(d) Exclusive rewards and benefits

Answer. (d)

Question: How does credit card interest accrue on unpaid balances?
(a) Interest is only charged on the original purchase amount.
(b) Interest is added only if the cardholder exceeds the credit limit.
(c) Interest is not applicable on credit card balances.
(d) Interest is calculated on the total unpaid balance.

Answer. (d)

Question: What is the annual percentage rate (APR) associated with credit cards?
(a) The number of rewards points earned per dollar spent
(b) The fee charged for obtaining a credit card
(c) The total balance available for spending on the credit card
(d) The interest rate applied to any outstanding balances if not paid in full by the due date

Answer. (d)

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Question: What is a common drawback of credit cards with high annual fees?
(a) The annual fee can outweigh the benefits, especially for light spenders.
(b) They often have lower interest rates.
(c) They offer unlimited cashback rewards.
(d) They automatically provide a high credit limit.

Answer. (a)

Question: What is a distinguishing feature of cashback credit cards that are often considered top choices?
(a) They only offer rewards in the form of travel points
(b) They require an extremely high credit score for approval
(c) They provide a percentage of the cardholder’s purchases as cashback
(d) They have limited acceptance at merchants

Answer. (c)

Question: How can a cardholder avoid paying credit card interest?
(a) By making only minimum payments each month.
(b) By making payments on or before the due date in full, eliminating the unpaid balance.
(c) By using a credit card for all purchases.
(d) By transferring the balance to another credit card.

Answer. (b)

Question: When was the first credit card introduced?
(a) 1950s
(b) 1930s
(c) 1960s
(d) 1980s

Answer. (a)

Question: How can relying heavily on credit cards for spending affect personal finances?
(a) It always results in a higher credit score.
(b) It eliminates the need to manage a budget.
(c) It guarantees zero interest rates on all purchases.
(d) It can lead to overspending and difficulty in keeping track of expenses.

Answer. (d)

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Question: Which credit card company was founded in 1950 and is known for its iconic “Don’t leave home without it” slogan?
(a) American Express
(b) Visa
(c) MasterCard
(d) Discover

Answer. (a)

Question: What is the credit limit on a credit card?
(a) The maximum number of transactions allowed per month
(b) The number of years the card can be used before expiration
(c) The total amount of money the cardholder owes to the bank
(d) The maximum amount of money that the cardholder is allowed to borrow and spend on the card

Answer. (d)

Question: The concept of using a credit card was initially developed for what purpose?
(a) Online shopping
(b) Travel bookings
(c) Consumer loans
(d) Emergency payments

Answer. (c)

Question: Which credit card company’s logo features overlapping circles representing cooperation between member banks?
(a) American Express
(b) MasterCard
(c) Visa
(d) Capital One

Answer. (b)

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Question: How does having too many credit cards impact your financial organization?
(a) It simplifies tracking of expenses and payments.
(b) It can make it challenging to keep track of payment due dates and balances.
(c) It eliminates the need to manage credit limits.
(d) It ensures you’ll never miss a payment.

Answer. (b)

Question: What is the typical process for canceling a credit card?
(a) Simply stop using the card, and it will automatically be canceled.
(b) Call/Email the credit card company’s customer service and request cancelation.
(c) Wait for the annual fee to be charged, and the card will be canceled automatically.
(d) Transfer the balance to another credit card to initiate the cancelation process.

Answer. (b)

Question: What was the name of the first widely accepted credit card?
(a) Visa
(b) American Express
(c) MasterCard
(d) Diners Club

Answer. (d)

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Question: What is a common characteristic of credit card companies like Visa, MasterCard, and American Express?
(a) They only offer secured credit cards
(b) They act as payment networks, partnering with banks to issue credit cards
(c) They are exclusively available to a specific industry.
(d) They primarily focus on offering store-specific credit cards

Answer. (b)

Question: What is the primary purpose of the CVV (Card Verification Value) on a credit card?
(a) It verifies the card’s authenticity during online or phone transactions.
(b) It ensures the card has sufficient funds for a transaction.
(c) It identifies the cardholder’s favorite color.
(d) It indicates the card’s expiration date.

Answer. (a)

Question: Where did the concept of the modern credit card originate?
(a) United States
(b) France
(c) China
(d) Australia

Answer. (a)

Question: What is the basic mechanism of how a credit card works?
(a) It provides instant access to unlimited funds for purchases.
(b) It deducts the purchase amount directly from the cardholder’s bank account.
(c) It requires the cardholder to pre-load funds onto the card before use.
(d) It allows the cardholder to borrow money from the issuing bank to make purchases.

Answer. (d)

Question: How is the credit limit on a credit card determined?
(a) It is based solely on the cardholder’s annual income.
(b) It is set at a fixed amount for all credit cards.
(c) It is automatically increased every year.
(d) It is determined by the cardholder’s creditworthiness, income, and other factors.

Answer. (d)

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Question: In what year was the first magnetic stripe credit card introduced?
(a) 1960
(b) 1950
(c) 1970
(d) 1980

Answer. (a)

Question: What happens when a credit card transaction is made?
(a) The issuing bank pays the merchant on behalf of the cardholder, and the cardholder becomes indebted to the bank.
(b) The cardholder receives cashback for every purchase made.
(c) The cardholder’s bank account is instantly charged for the purchase.
(d) The cardholder’s credit limit is reduced by the purchase amount.

Answer. (a)

Question: What is an annual fee in the context of credit cards?
(a) A fee charged for each credit card transaction made in a year.
(b) A fee paid by merchants for accepting credit card payments.
(c) A fee that credit card holders receive annually as a reward.
(d) A fee charged by the credit card company for using the card, usually on a yearly basis.

Answer. (d)

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Jaspreet

Jaspreet (Masters in Commerce-LLB) not only have exceptional command of Accounts and Commerce subjects but also have keen interest in Law. He is consistent in producing high quality assignments.

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