Credit Card Quiz: What Is Your Credit Card IQ?

This credit card quiz can show you how prepared you are. Or are not. Handling credit cards responsibly is an important part of good financial health. When you know how to get the best credit card, manage your spending and handle rewards you put yourself in a strong fiscal position.

Now take a few minutes to answer these credit card quiz questions and test your credit card knowledge with the following credit card iq quiz:

1. Which of the following is NOT true of the Credit Card Act of 2009?
   1. The act limits interest rates except on existing balances in most situations.
   2. The act removes over-the-limit fees unless you opt-in.
   3. The act raises minimum payments.
   4. The act forces due dates to be the same date each month.

   Correct Answer

   Answer: c. The Credit Card Act of 2009 did not mandate changes in minimum payments. However, many credit card companies and banks decided to make some changes to minimum payments to ensure that balances were paid off a bit faster. While before this act it was common to have minimum payments of just 1% of the balance, today it is more common to find minimum payments that are 1% or 2% of balance plus interest for the period. Of course, paying more than that is always a smart move.

   Wrong Answer

2. Of the following reasons to use credit cards which reason is not the best?
   1. Credit cards let you buy things that you cannot yet afford, making payments in the future.
   2. Credit cards give you benefits for purchases, such as warranty extensions or cash back bonuses.
   3. Credit cards are convenient and, generally, safer than cash.
   4. Credit cards help you to build your credit, perhaps the best reason to use credit cards.

   Correct Answer

   Answer: a. Credit cards let you buy things that you cannot yet afford, making payments in the future, though this is not one of the best reasons to use them. Of course, credit cards help you to build your credit, which is perhaps the best reason to use credit cards.

   Wrong Answer

3. Your credit score impacts your car and life insurance rates.
   1. True
   2. False

   Correct Answer

   Answer: a. Responsible use of credit cards gives you better insurance rates. Your credit score, which is determined in large part by your use of credit cards, also plays a major role in the rates that you are charged for auto insurance and life insurance.

   Wrong Answer

4. Which of the following benefits are possible with many credit cards?
   1. Car rental insurance.
   2. Earning cash back.
   3. Extending warranties on purchases.
   4. All of the above.

   Correct Answer

   Answer: d. When you choose the right credit card you can enjoy a variety of perhaps unexpected benefits.

   Wrong Answer

5. What is a secured credit card?
   1. A card guaranteed against fraud.
   2. A card that cannot be stolen because you wear it on a keychain.
   3. A virtual account number that you can use to shop online.
   4. A card that you secure with a small deposit.

   Correct Answer

   Answer: d. A secured credit card is a card that you secure by making a small deposit with the bank who issues the card. They are perfect for people with no credit or bad credit.
   HOW ARE YOU DOING on the credit card quiz? Well don’t stop now – keep going!

   Wrong Answer

6. What does APR stand for?
   1. Approximate Pay Rate
   2. Annual Proximal Rate
   3. Annual Percentage Rate
   4. Acquired Percentage Rate

   Correct Answer

   Answer: c. APR stands for Annual Percentage Rate. This is basically the interest rate that you are charged – how much you will pay to be extended this credit. APR can vary from 0% to 20% and even higher on a credit card. APR is an important factor, especially if you plan to carry a balance.

   Wrong Answer

7. It is okay to stretch the truth about how much money you make when you apply for a credit card.
   1. True
   2. False

   Correct Answer

   Answer: b. Some people believe that it is okay to stretch the truth about your income if you really want to get a certain card. But this is illegal. In addition, usually it is not necessary, as credit cards do not require you to have a high income to get their card.

   Wrong Answer

8. A FICO score falls between what range?
   1. 0 and 100
   2. 0 and 350
   3. 350 and 850
   4. 550 and 900

   Correct Answer

   Answer: c. A FICO credit score can range from 300 points to 850 points. If you have a FICO under 660 it is generally considered poor.

   Wrong Answer

9. What is the best way to improve your credit score?
   1. Make credit card payments on time.
   2. Apply for more cards.
   3. Apply only for Visa cards.
   4. All of the above.

   Correct Answer

   Answer: a. The best way to improve your credit is to pay your credit cards, and other bills, on time. FICO puts more emphasis on more recent items, so if you were late a long time ago it will not damage your credit as much as recent late payments would.

   Wrong Answer

10. How much should you pay on your credit card?
    1. You should pay only the minimum payment.
    2. You are legally required to pay the balance in full before your grade period ends.
    3. You should pay as much as you can, striving to pay more than the minimum payment.
    4. You should pay interest and fees plus 10% of the principle.

    Correct Answer

    Answer: c. While you are only required to pay your minimum payment each month doing so can cost you a fortune and allow your debt to linger for years – even decades. Paying a card off each month is great, but at least pay more than the minimum, paying whatever you can afford.

    Wrong Answer

Building Your Credit
The best credit card quiz is designed just to get you thinking. With proper credit card use you can build your credit history, making it easier for you to make large purchases such as cars and homes in the future. A good credit history will save you money in many ways and it is important to strive for. Consider how well you did on this credit card quiz and read up on areas where you may have been a bit rusty.