5.4 Lines of Credits and Credit Card
credit card
A _ is a card entitling the bearer to a revolving line of credit with a pre-established credit limit. Interest rates which are set by the issuers, vary considerably, and can be changed at any time. Generally, interest rates charged on this are higher than rates charged on loans made by financial institutions. Some issuers require an annual fee to be paid by the user. The bearer of this, with an authorized signature may make purchases instead of using cash to pay.
credit cards
Electronic card readers collect the information and communicate with the company almost instantly. Sometimes, it is not easy to accrue balances on several different loans of this-balances that never seem to go away.
month
Every _, a statement comes from the credit card company detailing the transactions.
finance charge
If the cardholder did not pay his/her previous bill in full, the credit card or charge account company adds a _.
average daily balance
In business today, the method is most widely used to calculate the finance charge on a revolving credit account on a daily basis. Each day's balance of a billing cycle is totaled and then divided by the number of days in that cycle. This gives an average of all the daily balances.
"charge it!"
Merchants in all categories and lending institutions alike, encourage us to just say _.
T
T or F: All credit cards charge interest.
T
T or F: Cardholder must compare listed purchases with all receipts.
T
T or F: Credit card statements have a list of transactions with the dates of these transactions and usually a very terse explanation to help identify the transaction
T
T or F: For accounts in which many charges are made each month, the average daily balance method results in much higher interest than the unpaid balance method, because interest starts accruing on the day purchases are made or cash advances are taken.
T
T or F: If the holder of the credit card religiously pays the full balance on or before the due date, they do not pay interest on any credit card purchases.
T
T or F: Many credit cards are free.
T
T or F: Many installment loans charge interest or a finance charge
T
T or F: Since money is coming and going (purchases, cash advances, payments) on a daily basis, it makes sense for the credit card lenders to calculate on a daily basis.
T
T or F: The cardholder does not pay purchase interest charges if he/she regularly pays his/her bill in full before the due date reflected in the statement.
T
T or F: The credit card interest (also called finance charge) is not as simple as with a mortgage or an auto loan.
T
T or F: The transaction list in a credit card should be scrutinized for errors and possible fraudulent entries.
T
T or F: When the cardholder is making a purchase using a credit card, he/she is actually paying money from a bank.
credit card
The bearer of the card, with an authorized signature, may make purchases instead of using cash to pay.
back of the sheet
The information section of a credit card statement is usually located where?
late 1960s
The popularity of credit cards dates back only to the _.
credit card
When the bearer withdraws cash by presenting the card, a cash advance fee is usually charged. Depending the issuer of the credit card, the cash advance fee may be deducted directly from the cash advance at the time the money is received or it may be posted to the account on the day the cash is received. Interest on the cash advance is cash advance is calculated starting from the day the money is withdrawn.
"buy now, pay later"
concept that has become a common way by which individuals and businesses purchase goods and services
finance charge
credit card interest is also called
due date
date for paying for all the purchases without incurring any interest
transaction summary
detailing your purchases, cash advances, and payments for the month
information section
explaining how to report a disputed item, how your finance charges are calculated, how the minimum payment is calculated, and so on
credit card statement
given monthly to the cardholder indicates the previous balance, finance charge, total of purchases, any payments and credits, and new balance
finance charge
interest that the company charges to a credit account for not paying the total amount owed by the due date
vendor of your purchase
pays for the fee (interest) on the credit card before the due date
back of the statement
presents the details of how the credit card company calculates cardholder balance and finance charge and how it credits the payments
finance charge summary
showing the different rates charged and your specific finance charges for the month
account summary
showing your previous balance, payments, and credits during the previous month, finance charges for the previous month, and your new balance
monthly statement
shows a date for paying for all the purchases without incurring any interest (the due date)
line of credit
A _ pre-approved loan agreement between a financial institution and a borrower. The borrower may withdraw money up to an agreed maximum, at any time. Interest is charged only on the amount withdrawn from the line of credit. A minimum repayment may be required each month. The borrower may repay any additional amount at any time without further penalty. The rate of interest charge for money borrowed on this is often lower than the rate of interest charged on most credit cards. The interest rate can be changed over time.
tear-off piece
A _ showing your name and address, the card company's name and address, all part of your account number, your account balance, the payment due date, and possibly the minimum payment due. This piece is returned to the card company with your payment.
