 | Term | Definition |
| |
credit card |
involves drawing a loan from a bank; balances may carry over from month-to-month subject to finance charges; the issuer of the car earns money mainly from annual fees, finance charges, and penalty fees |
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charge card |
involves drawing a loan from a bank; balances may NOT carry over from month-to-month without penalties; the issuer earns money frm penalty fees and fees on participating businesses (higher than those paid for other types of cards) |
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whenever possible |
a golden rule for using credit cards: when should you use cash instead? |
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two |
you should never have more than ___ credit cards |
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never |
when should you allow your card limit to exceed what you can afford? |
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card balance |
pay your ____ ____ off each month, if possible, or pay more than the monthly minimum payment |
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as much as you can pay off |
how much should you borrow each month for the first few years if you want to establish good credit? |
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when you're ready for one |
when should you get a credit card? |
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no annual fees |
what's one feature that you want your card to have when you're trying to establish good credit? |
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truth-in-lending act |
a credit law that states athat lenders must disclose information that allows you to compare loans. this includes finance charges (APR) and how calculated, the length of grace period, the minimum payment required, and annual fees if applicable |
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fair debt collections act |
the credit law that protects consumers from abuses by creditors and collection agencies because it states that they can't contact you at unusual times without your consent or otherwise harass or abuse you |
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equal credit opportunity act |
the credit law that ensures that consumers will be given equal chance to get credit, including: to know whether your credit application has been accepted or denied within 30 days, and to receive a free copy of your credit report if you request it within 60 days of being denied credit. |
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fair credit reporting act |
the credit law that says that you can receive a free credit report once a year, you can dispute incomplete or inaccurate information on your credit report, you must give consent before reports are given to employers, landlords, and others, and bankruptcies can remain on your record for up to ten years |
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payment history |
the most important factor that affects your credit score |
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outstanding debt |
the second most important factor that affects your credit score |
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length of credit history |
the third most important factor that affects your credit score |
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new credit applications |
the fourth most important factor that affects your credit score |
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types of credit applied for |
the fifth most important factor that affects your credit score |
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5 factors that affect credit scores |
payment history, outstanding debt, length of credit history, new credit applications, and types of credit applied for |
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equifax experian transunion |
the three major credit bureaus |
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secured loan |
backed up by collateral that can be seized if loan is not repaid (mortgage and car loans) |
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unsecured loan |
based simply on a person's promise to repay loan (student loan) |
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average daily balance |
the daily balance over the past month averaged to calculate the finance charge; the most common method |
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adjusted balance |
payments made during the billing cycle subtracted from the balance before calculating finance charge; most advantageous method |
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previous balance |
the finance charge is based on the outstanding balance at the beginning of the billing cycle |
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two-cycle balance |
daily balance over the past two billing months averaged to find the finance charge; the most exnpensive method because you must pay retroactive interest if the entire bill is not paid off within a single month |
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written complaint |
you have to submit a ______ ______ to the credit card company within 60 days of receiving the bill if you want to dispute it |
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stop using your cards |
a strategy for reducing credit card debt that involves paying with cash or debit only |
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consolidate loans |
a strategy for reducing credit card debt that involves slimming down to only one low-rate card |
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minimum |
a strategy for reducing credit card debt that involves paying more than the ____ balance |
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debt snowball |
a strategy for reducing credit card debt that involves paying the minimum on all other card bills while attacking the one with the lowest balance |
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