Kenya used a debit card to buy a pair of jeans. Which statement is true about her method of payment?

• A. The transaction created a liability that must be repaid with interest.
• B. She will receive a monthly bill to pay for the jeans later.
• C. The payment was deducted directly from her bank account at the time of purchase.
• D. The purchase increased her available credit limit.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a debit card: A debit card is linked directly to the user's bank account, and transactions made using a debit card are deducted immediately from the account balance.
2. Analyze the options provided in the problem: Evaluate each statement to determine which aligns with the functionality of a debit card.
3. Option 1: 'The transaction created a liability that must be repaid with interest.' This describes a credit card, not a debit card, as debit card transactions do not create liabilities or involve interest.
4. Option 2: 'She will receive a monthly bill to pay for the jeans later.' This is also characteristic of a credit card, where purchases are billed monthly. Debit card transactions are settled immediately.
5. Option 3: 'The payment was deducted directly from her bank account at the time of purchase.' This is the correct description of how a debit card works, as funds are withdrawn directly from the linked bank account at the time of the transaction.