Future Business Leaders of America (FBLA) Personal Finance Practice Test

What is one advantage of using credit?

1. Requires full payment upfront

2. Increased savings on interest

3. Use of product while paying for it

4. No transaction fees

The correct answer is: Use of product while paying for it

One significant advantage of using credit is that it allows consumers to use a product or service immediately while spreading out the payments over time. This means that individuals can enjoy the benefits of the item right away without needing to gather the full amount upfront. For instance, if someone needs a new appliance, they can purchase it on credit and start using it immediately, paying off the cost over weeks or months. This is particularly useful in emergencies or when making significant purchases such as a vehicle or home, where the upfront cost might be prohibitive. Additionally, the ability to buy now and pay later can help individuals manage cash flow, as they can budget their payments alongside other expenses. This flexibility can enhance purchasing power and make it easier to handle larger expenses without significant financial strain at the moment of purchase.