Which statement best describes purchases made
with a credit card?
A Purchases made with this card are withdrawn
directly from a bank account.
B Purchases made with this card require a PIN
number.
C If you don’t record your purchases, you may
have to pay a overdraft fee.
D Purchases made with this card are subject to
interest.
D Purchases made with this card are subject to interest.
are you sure
Yes, I am sure. Purchases made with a credit card are not withdrawn directly from a bank account (option A is incorrect). Instead, the credit card issuer lends a certain amount of money to the cardholder, which must be paid back with interest over time. A PIN number may be required for debit card transactions (option B is incorrect), and overdraft fees are only applicable for transactions that exceed the available balance in a bank account, not a credit card (option C is incorrect). Therefore, option D is the correct answer.
The correct answer is D: Purchases made with a credit card are subject to interest. To understand this, it is important to have a basic understanding of how credit cards work.
Credit cards allow you to borrow money from a financial institution to make purchases. When you make a purchase using a credit card, the bank or credit card issuer pays the merchant on your behalf, allowing you to defer the payment until later.
Unlike debit cards or prepaid cards, credit card purchases are not directly withdrawn from a bank account (Option A). Instead, the credit card issuer provides you with a line of credit, which essentially represents the maximum amount of money you can borrow using the credit card.
When you use a credit card, you are typically required to sign a receipt or enter your card details online. In most cases, a PIN number is not required for credit card purchases (Option B). However, some credit cards do have a Chip and PIN feature, which requires you to enter a PIN number for certain transactions, but it is not a universal requirement.
Option C, "If you don't record your purchases, you may have to pay an overdraft fee," is not a typical characteristic of credit card purchases. Overdraft fees are usually associated with checking accounts or debit cards, not credit cards.
Finally, Option D is the correct answer. Purchases made with a credit card are subject to interest. If you don't pay off your credit card balance in full by the due date, the credit card issuer will charge you interest on the remaining balance. This interest rate is typically higher than other forms of borrowing, which is something to be mindful of when using a credit card.