Financial Management

Using Credit Wisely

What is the difference between a credit card and a debit card?

The difference is that with a credit card if you buy something you have to pay it off at the end of the month. With a debit card you have all the money that's in your bank that you can spend.

Describe three ways you can develop a positive credit history.

  1. Make sure you have the money to pay off whatever you buy with your credit card at the end of the month.
  2. Pay more than the minimum amount, always pay in full.
  3. Don't spend more than you have.

Give a description of five different financial apps and/or websites that help people manage their money.


The Betterment portfolio is designed to achieve optimal returns at every level of risk. Through diversification, automated rebalancing, better behavior, and lower fees, Betterment customers can expect 4.30% higher returns than a typical DIY investor.


See all your balances and transactions together. Mint automatically pulls all your financial information into one place, so you can finally get the entire picture.


We handle payments, so you can focus on what really matters: delighting your customers.


Retirement, college savings, your dream house. Whatever your investment goals are, we can help get you there sooner.


inDinero is your entire back office. We take care of your accounting and file your corporate tax returns. Focus on what matters most, and leave the rest to inDinero.

Explain three advantages and three disadvantages of using credit.


  1. Many credit card companies offer low introductory interest rates. These offers allow you to move balances to lower-rate cards.
  2. Most credit card companies will handle disputes for you. If a merchant won't take back a defective product, check with your credit card company.
  3. Controlled use of a credit card can help you establish credit for the first time or rebuild credit if you've had problems in the past--as long as you stay within your means and pay your bills on time.


  1. Low introductory rates may be an attractive option, but they last only for a limited time. When the teaser rate expires, the interest rate charged on your balance can jump dramatically.
  2. It's up to you to make sure you receive proper credit for incorrect or fraudulent charges.
  3. Consumers are using credit more than ever before. If you charge freely, you may quickly find yourself in over your head--as your balance increases, so do your monthly minimum payments.

What is APR and why is it important to know when applying for a credit card?

A single credit card account can have several different APRs. For example, your credit card issuer may charge one APR for purchases and another for balance transfers. Also, some APRs can vary over time. Issuers may encourage you to use your card by offering promotional APRs that give you a lower interest rate on certain types of transactions for a set period of time. When the promotional period is over, the APR may adjust to a higher level, raising the cost of carrying a monthly balance. Used wisely, however, these low promotional rates can save you money.

All of the APR information is clearly displayed in a comparison box or chart in your credit card Agreement and on the issuer's credit card site. Be sure to check it thoroughly.


Number of months to pay off
This is how long it will take you to pay off the entire amount.9

Final month's payment
The last payment on this account.$29.30

Total finance charge
This is the total amount of money you have paid toward interest.$29.30

Total cost:$429.30

When and where can you order a free credit report? Why is it important?

Your credit report is a detailed look at your credit habits, the types of debt you have outstanding, and is the basis for your credit score. Simply put, it's a picture of your credit.Visit to get a free copy of your credit report from each of the nationwide credit reporting companies. You can receive a free credit report from each reporting company once every 12 months. You can also order your free credit report:
  • By phone: Call (877) 322-8228

What should a borrower do if they are experiencing financial difficulties?

Talk to the lender before deciding to skip a payment. Lenders tend to be more flexible with borrowers who contact them first. Borrowers lose options if they default first. Ignoring the problem will not make it go away. It will only get worse. The consequences of defaulting on student loans are very serious and often increase the cost of repaying the loan.

Get help from a family member or a financial professional, such as an accountant (CPA) or financial planner (CFP). A non-profit credit counselor, such as those certified by the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA), might also be able to help.

Bankruptcy is generally not an effective solution for student loans. Federal and private student loans are almost impossible to discharge in bankruptcy. A bankruptcy discharge requires the borrower to demonstrate undue hardship in an adversarial legal proceeding, a very harsh standard. Most bankruptcy attorneys will not even try to get student loans discharged.