Which statement is true regarding credit cards?

Which statement is true regarding credit cards?

• A. All transactions must be paid in cash
• B. They can help build credit history if used responsibly
• C. They are only for emergencies
• D. They have no associated fees

Answer: (B)

The statement that credit cards can help build credit history if used responsibly is true because credit cards are designed to enable consumers to borrow funds to make purchases with the expectation that they will pay back that amount, often accompanied by interest if not paid in full. When you use a credit card and make timely payments, you demonstrate to credit bureaus that you are a responsible borrower. This positive behavior can enhance your credit score, which is crucial for future financial dealings, like obtaining loans or mortgages. Maintaining a lower credit utilization ratio, making payments on time, and keeping accounts in good standing all contribute to a solid credit history. Using a credit card effectively can also lead to increased credit limits and opportunities for lower interest rates in the future, further enhancing one's financial wellbeing. Thus, responsible use of credit cards is a strategic way to establish and improve one’s credit history over time.

The statement that credit cards can help build credit history if used responsibly is true because credit cards are designed to enable consumers to borrow funds to make purchases with the expectation that they will pay back that amount, often accompanied by interest if not paid in full. When you use a credit card and make timely payments, you demonstrate to credit bureaus that you are a responsible borrower. This positive behavior can enhance your credit score, which is crucial for future financial dealings, like obtaining loans or mortgages.

Maintaining a lower credit utilization ratio, making payments on time, and keeping accounts in good standing all contribute to a solid credit history. Using a credit card effectively can also lead to increased credit limits and opportunities for lower interest rates in the future, further enhancing one's financial wellbeing. Thus, responsible use of credit cards is a strategic way to establish and improve one’s credit history over time.