Two basic distinctions between cards:

Where the card is accepted

When the charges must be paid

Managing Credit Cards

Katelin Collins, Meg Nolan, Kisiah
Waterhouse

Private Label Cards:

Ex:

Can be used only at a single retailer

General Purpose Cards:

ex:

Used at different businesses around the country/world. (Bank care,

major credit card)
General purpose cards can be used to make purchases and to obtain cash
advances

Revolving Credit:

Payment options the cardholder has upon reviewing the bill:

Pay for charges in full
Make a minimum payment
Obtain any inbetween amount
Also referred to as a charge card

Co-branded Cards:

Carries the name of a card network, a bank, and possibly another

company

Status Cards:

Offers increased credit and other benefits

Highly promoted to customers with established credit
Charge of an annual fee
Also known as a prestige, gold, or platinum cards.

Affinity Card:

Ex:
ex:

Carries the name of a nonprofit or charitable organization

Organization receives money for every dollar charged on the card or
a portion of the annual fee.

Smart Card:

Has a computer chip to make web order forms easier to fill out
Cost and features of credit cards

Annual Fees:

Teaser Rate:

Ex:

APR:

Annual rate of interest that is charged for using credit

Makes a difference on the cost of using credit
Can go up or down depending on economic factors.

Computation Method:

Few private label cards charge a fee, some general purpose cards do.

Agreement that specifies how finance charges are

computed
Makes a difference on how much you will pay

Low introductory rate that effect us for a limited time

Minimum Payment:

Must make a minimum payment by the due date listed in the credit
agreement
Creditor may require the full outstanding balance of your account if
not payed on time

Truth in Lending Act:

Requires creditors to inform consumers about terms and costs

Lender must disclose specific information such as;

APR
How variable rates are calculated
When payments are due
All fees
Before applying: read disclosures and understand basic terms

Time during the balance may be paid in full to avoid finance charges
Might not apply if previous bill is unpaid
Allowed by most credit cards
Common time is 20-25 days

Once applications are accepted a cardholder agreement spells out the

terms in detail

Minimum Finance Charge:

Grace Period:

Some specify that in months when you owe a finance charge, it will at
least specify a certain amount
Ex: Carry over balance of $1.00 and $.50 minimum charge may apply
Different cardholder agreements may specify fees for:
Late Payments
Cash Advances
Exceeding credit limit
Returned checks

Colleges have banned on campus credit pitches

Students run up debt and end up in a credit card trap

Credit Limit:

Maximum credit that the creditor will extend to the borrower

Special Features:
Rebates/Discounts
Flyer miles
Insurance coverage

Benefits way against annual fee/interest rate

If you carry over a balance, search for a low interest rate
Pay bill in full you get a card and no annual fee

Using Credit Cards:

Your credit limit is a maximum, not a goal

Save your receipts and check them with your monthly bill

Set a personal limit on how much to spend each month

If possible pay the balance in full so you dont get finance charges, if not
pay the largest payment you can

Fair Credit Billing Act

Outlines procedures for settling credit card billing disputes.

To preserve your rights:

Write a letter to the creditor
The letter must be received by the creditor within 60 days
after you received the bill containing the error
Include: name, account number, description of the
problem, receipt copies and document copies
Send the letter by mail and keep a copy of it.

Pay bills on time to protect your credit history and avoid late fees

Fair Credit Billing Act

The creditor is required to respond in writing to your letter within 30 days,
and resolve the problem within 90 days.
During this time period:
The creditor will investigate the situation
You are obligated to pay the bill as usual, but may withhold payment
from the disputed amount
If the investigation says that the amount is correct, you must pay
that amount and finance charges that have accumulated
If the error on your bill is confirmed, the creditor must credit your
account for the errors amount and remove any related finance
charges.

Safeguarding your card: Credit Card fraud

Unauthorized use of credit cards or account numbers that have fallen

into the wrong hands.

To protect yourself Keep cards with you or in a safe place

Make sure you have your card is returned to you after making a
purchase
Know the site is secure before online purchasing
Keep your card in site when paying for a purchase
Keep record of your card numbers
Notify the card company ASAP if its lost or stolen

Consumer Credit Protection Act:

Maximum amount for which you may be held liable if someone uses the
card illegally. ($50)
If the company is notified of the lost card, you have no liability.
A monthly statement, or bill, lists:
All transactions
Finance charges
Account balance
Minimum payment due
Due Date
Check:
Transactions against receipts
Check interest rate on your statement and verify that its the same
on the C.C.A (Credit card agreement)