Module #3 Debit, Credit, & Prepaid Cards

managing your card accounts

-stick to your budget -follow the 20-10 rule -be a good credit customer -review your monthly statements -take advantages of secure online access to credit/debit card accounts

cash advance transaction finance charge

A fee assessed on the date a new cash advance transaction is posted to an account -interest rate is usually higher than the rate for purchases

annual fee

An amount that credit card companies can charge for the use of a credit card.

introductory rates

Credit cards often offer lower or APRs as special promotional offers. -lasts anywhere for a few months to a year, then back to normal

Credit Card Act of 2009

No credit card until 21 or must have co-signer -must show proof of sufficient income

credit line

The maximum amount you can borrow on a credit card

credit cards

a card that allows a person to charge at the moment and pay later -Benefits: carry no cash, build credit score, purchase large items, zero liability, cash advance in emergency, reward points -Things to watch for: impulse buying, items cost more (interest), late fees, additional fees for cash advances

debit card

a card used to withdraw money from your bank account -Benefits: carry no cash around, zero liability, no interest, no payments, no debt -Things to watch for: if you overdraw you will get charged a fee, there are ATM fees

late payment fee

a fee charged if a credit card payment is received after the due date

finance charge

based on interest rate, the amount you pay (interest) on the outstanding balance

prepaid cards

cards sold in specific dollar amounts that can be used to purchase products or services -Benefits: spend only whats on there, track spending online, no interest, same purchase as debit/credit - Things to watch for: only certain stores, fees (activate, monthly maintenance, loading)

20-10 rule

credit card debt should be less than 20% of your annual income, and less than 10% of you monthly income should go to paying off credit card debt

cardholder agreement

document about the terms and conditions if your credit card account. Includes your APR, annual fee (if you have it), penalties, & other costs associated with your account

zero liability

don't pay for unauthorized charges made with your account

annual percentage rate

interest rate, % used to compute finance charges on an outstanding balance

protecting your pin

never write your pin # on back of card/ somewhere where someone can easily get ahold of it

minimum monthly payment

the amount based on your % of the outstanding balance, or minimum fixed amount

grace period

the time between the billing date and the payment due date when no interest is charged

overdraft

when you write a check or withdrawal form your checking account that leaves your balance under 0. IF you sign up for overdraft protection, your bank will cover the transaction, but charge you an overdraft fee