International Baccalaureate (IB) Practice Exam

What is commonly avoided by most Americans when purchasing big-ticket items?

1. Cash payments

2. Credit use

3. Financing from dealers

4. Insurance coverage

The correct answer is: Credit use

When purchasing big-ticket items, many Americans tend to avoid using credit due to a variety of reasons, primarily revolving around the desire to manage their finances prudently and avoid accumulating debt. People often prefer to pay for large purchases outright with cash or seek alternative financing options that do not involve a credit check or high-interest rates, such as personal loans or using savings. This behavior is influenced by a growing awareness of financial literacy and the implications of high-interest debt associated with credit usage. As a result, the preference is often for options that allow for more straightforward budgeting and reduced financial liability. While financing from dealers may offer convenience, many individuals weigh the potential cost of borrowing against their financial goals, leading them to lean toward cash payments or avoiding credit altogether.