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

Which type of credit card typically allows the cardholder to carry a balance?

1. Secured credit card

2. Open-end credit card

3. Charge card

4. Debit card

The correct answer is: Open-end credit card

The type of credit card that typically allows the cardholder to carry a balance is the open-end credit card. This kind of card offers a line of credit that can be used repeatedly, up to a specified limit. When a cardholder makes a purchase using an open-end credit card, they have the option to pay the full balance or carry over a portion of the balance to the next billing cycle. This enables the cardholder to incur interest on the remaining balance, which is a common feature associated with open-end credit. In contrast, secured credit cards generally require a cash deposit that serves as collateral against the credit limit and typically do not function in the same way as traditional revolving credit. Charge cards, on the other hand, require the full balance to be paid off each month and do not allow for carryover balances. Lastly, debit cards are not considered credit cards; they draw directly from a bank account, and there is no borrowing involved, eliminating the concept of carrying a balance.