9
practice testMultiple Choice

Practice Test

Question 9 • Personal Finance

Which describes the difference between a personal loan and a credit card?

Answer
A
Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow.
B
Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow.
C
Credit cards are secured loans for large amounts, while personal loans are unsecured for small purchases.
D
Personal loans are secured for small purchases, while credit cards are unsecured loans for large amounts.

Explanation

A personal loan typically provides a borrower with a lump sum that is repaid over time. A credit card instead gives the borrower a credit limit—the maximum amount they can borrow—and they can use and repay portions of it repeatedly. This matches choice A.

AI-written and checked against the verified answer.

Previous
Next