Which financial tool allows the holder to borrow funds to pay for goods and services and promises repayment?

Which financial tool allows the holder to borrow funds to pay for goods and services and promises repayment?

• A. Check
• B. Credit Card
• C. Balance
• D. CD

Answer: (B)

A credit card is a line of credit that lets you buy goods and services now and repay later. The issuer covers the purchase up to your credit limit, and you enter into a repayment agreement, either paying the full balance by the due date or carrying a balance with interest. This setup is specifically about borrowing funds and a promised repayment to the lender, which is why it fits the prompt. Using a check doesn’t involve borrowing; it draws funds from your own bank account when it clears. A balance isn’t a payment tool at all—it’s simply an amount owed or on hand. A CD (certificate of deposit) is a savings product with a fixed term and interest, not a method to borrow for everyday purchases. Therefore, the credit card best matches the description.

A credit card is a line of credit that lets you buy goods and services now and repay later. The issuer covers the purchase up to your credit limit, and you enter into a repayment agreement, either paying the full balance by the due date or carrying a balance with interest. This setup is specifically about borrowing funds and a promised repayment to the lender, which is why it fits the prompt.

Using a check doesn’t involve borrowing; it draws funds from your own bank account when it clears. A balance isn’t a payment tool at all—it’s simply an amount owed or on hand. A CD (certificate of deposit) is a savings product with a fixed term and interest, not a method to borrow for everyday purchases. Therefore, the credit card best matches the description.