When you use a (______________), you pay for
your purchases later.
A credit card
B checking account
C deposit
D credit score
A credit card
is this true
Yes, it is true that when you use a credit card, you are essentially borrowing money from the card issuer and will need to pay it back later, along with any additional fees or interest that may apply.
The correct answer is A) credit card.
When you use a credit card, you pay for your purchases later. Here's how it works:
1. First, you need to apply for a credit card from a bank or a financial institution. They will assess your income, credit history, and other factors to determine your eligibility.
2. Once you are approved, the bank will issue you a credit card with a predetermined credit limit. This credit limit is the maximum amount of money that you can borrow using the credit card.
3. When you make a purchase using your credit card, the amount is not immediately deducted from your checking account or savings account. Instead, the bank extends you credit and pays for your purchase on your behalf. They will keep a record of this amount, which is known as your credit card balance.
4. At the end of each billing cycle (usually monthly), the bank will send you a statement that details your purchases, any fees or interest charges, and the minimum payment due.
5. Here comes the important part: you have the option to pay off the full credit card balance by the due date, or you can choose to pay the minimum payment due. If you pay the minimum amount, the remaining balance will roll over to the next billing cycle and start accruing interest.
6. If you fail to make the minimum payment by the due date, you may be charged a late payment fee, and it could negatively impact your credit score.
7. It's worth noting that credit cards also offer additional benefits, such as rewards programs, cashback offers, travel insurance, and purchase protection. However, it's important to use your credit card responsibly, as excessive borrowing or not paying the balance in full can lead to debt and financial difficulties.
In summary, when you use a credit card, you are essentially borrowing money from the bank to make purchases, and you will need to pay back the borrowed amount later.