Credit Card Test

How much are you liable for?

$50 ($0 if the lost card is reported before use)

Set-up and Maintenance Fees:

-Annual Fee: yearly fee that may be charged for having a credit card -Set-Up Fee: fee for opening the account -Participation Fee: monthly fee for having a credit card

Penalty Fees:

-Late Payment Fee: charged when credit card doesn't make minimum monthly payment by due date -Over the limit fee: charged if account balance goes over set limit

How to get a credit card:

-Shop around: compare different credit card offers and decide which ones the best -Complete credit card application: a form requesting information about a person -Approval?: applicant may or may not be approved, depends on credit worthiness

APR for Balance Transfers:

-act of transferring debt from one credit card to another

Transaction Fees:

-balance transfer fees -cash advance fees -other fees

Examples of a credit card reward:

-cash rebates -warranties for items purchased -airline miles -travel insurance

Credit card tips from the CFPB:

-charge fees before they settle your debts -give a guarantee that they can make your debt go away

If you are under 21, how do you receive a credit card?

-have a co-signer -have proof of sufficient income to make payments

To disadvantages of a credit card:

-if you don't pay off your card in full, you're charged interest -you can overspend

Penalty APR and when it applies:

-interest rate charged on new transactions if the penalty terms in the contract are triggered

Annual Percentage Rate (APR) for Purchases:

-interest rate paid for purchases -multiple interest rates may be listed

What are 3 ways a credit card is a convenient payment tool?

-no need to carry large amounts of cash -useful in emergencies -often required to hold a reservation

Two advantages of a credit card:

-not linked to your bank account -receive cash advance

Identify 4 positive credit card behaviors:

-pay credit card balances in full every month -pay credit card bills on time -be conscious of how credit cards affect your credit history -check monthly credit card statement for errors

How to avoid paying interest on purchases:

-pay your interest in full by the due date

Summarize why credit cards are safer than debit cards for online shopping

-they have more protection against fraud -there is less liability for unauthorized credit card charges -money is not directly connected to your bank account

Minimum Interest Charge:

-typically $0.50 to $2.00 per month

APR for Cash Advances:

-withdrawing cash from an ATM using a credit card

Credit Card:

A plastic card that you can use to access a line of credit that has been established in advance

The cost of credit is expressed as:

APR

Introductory rate:

APR that is charged after introductory period ends

Transactions:

All transactions that have occurred since last statement

Variable Rate APR:

An APR that could change from other factors

Summary of Account Activity:

An overview of all the basic information for the credit card

Fees and Interest Charges:

Are listed separately

To determine if the benefit is for you, you should...

Carefully evaluate if the benefits outweigh the cost

To offer these benefits, credit card companies may...

Charge additional fees or higher interest rates

Schumer Box:

Easy to read box format that discloses the terms and fees of credit cards

Why should you check your statements monthly?

For possible errors

What does it mean if an individual receives a preapproved credit card application?

It means that you have passed the initial credit check

What impact does only paying the minimum payment have on a consumer?

It takes them longer to pay it off

Why may consumers overspend when using a credit card?

It's easy to lose track on how much they've charged to it

Other changes to your account terms:

Notifies the cardholder if any increase in fees or any other significant changes to account

Notice of changes to your interest rates:

Notifies the cardholder if the rates for the card will be increasing

Is a credit card open-end or closed-end?

Open-end

Interest Charge Calculation:

Provides summary of interest rates on the different types of transactions, the amount of each, etc.

If you lose your credit card, what should you do?

Report it lost or stolen immediately

What is the minimum payment?

Smallest amount that you have to pay each month to the credit company

Late Payment Warning:

States any additional fees and the higher interest rate that may be charged

Year-to-date Totals:

The total amount paid in fees and interest charges are displayed for the year

Payment Information:

The total new balance, the minimum payment amount, and the date payment when due is included

Why is it important to read a monthly statement closely?

To check for errors

Why is reading the Schumer Box information closely important?

To understand all the terms on your credit card

Minimum Payment Warning:

Warning that includes an estimate of how long it can take to pay off a credit balance