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Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
Credit Card Terminology
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Credit Card Terminology

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  • 1. Personal Finance Credit Cards: Terminology
  • 2. Annual Fee
    • A charge for use of a credit card issued each year. The annual fee can range from $15 to $300 and is billed directly to the customer's _______ _________. Many credit cards come without an annual fee. Some cards charge high Annual Fees but have little or no APR.
  • 3. Annual Percentage Rate (APR)
    • APR is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, _______ _____, and certain other credit charges that the borrower is required to pay. This is not the same as the _________ ______ of the card.
  • 4. Billing Error
    • Any mistake in your monthly statement as defined by the Fair Credit Billing Act.
    • This includes any of the following:
      • Unauthorized Charges.
      • Charges listing wrong date or amount.
      • Charges for goods/services that weren’t delivered or you didn’t accept.
      • Math errors.
  • 5. Cash Advance
    • An instant loan obtained from a credit card account. Credit card issuers charge interest from the date of the advance until it is repaid, and may also charge a ___________ _____ based on the amount of the advance.
    • Usually the interest rate on a cash advance is significantly higher than the standard interest rate.
  • 6. Charge Card
    • A type of credit card which requires full payment of the bill each month; no interest is charged.
    • The most well known charge card is ___________ _________.
  • 7. Co-Signer
    • A person with an acceptable credit rating who promises to repay a debt if the ___________ _______ to do so.
  • 8. Creditor
    • A person or business from whom you _________ or to whom you owe money.
  • 9. Credit Scoring System
    • A statistical system used to rate credit applicants according to various characteristics relevant to ____________________.
    • The amount of money that you owe approximately accounts for 30 percent of your credit score. The score pays particular attention to the amount you owe in revolving credit such as credit cards.
    • Scores range between 350 and ___.
  • 10. Credit Scoring System Examples
    • You have several credit cards with a small balance that you pay off regularly, then this reflects _______ on your score.
    • You have the same number credit cards with no balance, this shows a greater likelihood of “_______ ____“ those cards and thus a lower score.
    • If you have too many credit cards it will also reflect poorly on your credit report.
  • 11. Credit Scoring System Problems
    • To illustrate the way in which credit scores effect interest rates, the Center for Community Change explained in 2005:
      • Individuals in the top credit score tier, +720, will generally pay 5.546 percent for a $100,000 __________ carrying a monthly payment of $572.
      • An individual with a credit score under 559 will pay 7.945 percent on the same mortgage, carrying a _________ ________ of $730.
  • 12. Credit Limit
    • The ________ ____ _________ you are authorized to use.
    • This includes purchases, cash advances, finance charges and other fees.
  • 13. Equal Credit Opportunity Act
    • This requires that all credit applicants be considered on the basis of their ________ ______________ for credit and not be rejected because of certain personal characteristics.
  • 14. Fair Credit Billing Act
    • This sets up procedures requiring creditors to promptly credit your payments and correct billing mistakes and allows you to __________ _________ on defective goods.
  • 15. Finance Charge
    • This is the total dollar amount you pay to use credit. It includes:
      • Interest costs
      • Service charges
      • Some credit-related __________ _______.
  • 16. Grace Period
    • The period of time from the billing date of your credit card statement to the due date of your current bill, when you can pay in full _________ _____ ________ interest.
    • This is not the same as the ‘Grace Period’ discussed when we covered CDs
  • 17. Joint Account
    • A credit account held by two or more people so that all can use the account and all assume ______ ____________ to repay.
    • Most commonly used by families between spouses or guardian and child.
  • 18. Open-End Credit
    • Also known as ‘revolving credit’. A line of credit that may be used repeatedly, including credit cards, overdraft credit accounts, and home equity lines.
    • _______ _______ are the most common form of open-end credit.
  • 19. Truth in Lending Act (TILA)
    • A federal law that requires lenders to provide certain information so __________ can compare one loan to another. The most important facts lenders must provide are:
      • _________ charges in dollars
      • Annual percentage rate (APR)
      • Credit issuer or company providing the credit line
      • Size of the credit line
      • Length of grace period
      • Minimum payment required
      • Annual fees
      • Fees for credit insurance

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