Credit Card Vocabulary, Applications, and Terms

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Money Management II

• Credit Card Vocabulary, Applications, and Terms
  Conditions

2
What Were Covering Today

• More vocabulary related to Credit Cards!
• Different ways to apply for credit cards
• Reading and understanding your Terms Conditions

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Credit Card Vocabulary

• Average Daily Balance Method by which most
  credit cards calculate the finance charges for
  the period. It is found by adding each days
  balance and then dividing the total number of
  days in a billing cycle. The average daily
  balance is then multiplied by the monthly
  periodic rate to determine the finance charges.

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Credit Card Vocabulary

• Annual Percentage Rate (APR) The cost of credit
  on a yearly basis. It is expressed as a
  percentage. Lenders are required by law to
  disclose the APR.
• Balance Transfer The process of moving unpaid
  credit card debt from one issuer to another.
  Often comes with a fee of some form.

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Are We Still Doing Vocab?

• Cash-Advance Fee A charge by the lender for
  using the credit card to obtain cash. Can be a
  flat rate or percentage (2/10).
• Cardholder Agreement The written statement
  provided to the cardholder outlining the terms
  and conditions. Required by Federal Reserve
  regulations. Must include the APR, monthly
  minimum payments formula, annual fee and
  cardholders rights in billing disputes.

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More Vocabulary

• Minimum Payment The minimum amount a cardholder
  can pay to keep the account from going into
  default.
• Over-the-limit fee A fee charged for exceeding
  the credit limit on the card.
• Pre-Approved When a potential customer has
  passed a preliminary credit-information
  screening. Does not guarantee a line of credit.

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Vocabulary Coming Out Your Ears

• Secured Card A credit card that a cardholder
  secures with a savings deposit to ensure payment
  of their outstanding balance if the account
  defaults on payment. Used by people new to
  credit, or those who are attempting to rebuild
  their credit.
• Teaser Rate Also known as the introductory rate,
  a below-market interest rate offered to entice
  customers to switch lenders.

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Always Room for J-E-L-L-O!

• Variable Interest Rate An interest rate that
  changes periodically based on changes in other
  interest rates.

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Applying For a Credit Card

• Applying for a credit card seems to get easier
  and easier every day.
• There are multiple ways to apply including
• In person, at a financial institution
• In person, through a promotional event
• Sporting Events
• Welcome Week on Campus
• By telephone
• Traditional snail mail
• Online

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Terms and Conditions

• The terms and agreement of a credit card outline
  all of the specifics of your relationship with
  the creditor.
• This includes
• Finance charges
• Due dates
• Specific lending policies
• Much, much more!
• The terms are set by the creditor and legally
  agreed upon by the cardholder upon card use.
• The terms and conditions are subject to change,
  at the lenders discretion.

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Wrap Up and Review

• Theres a lot of vocabulary associated with
  credit and credit cards!
• There are multiple ways to apply for a credit
  card. As time passes, creditors will no doubt
  find new ways to make it possible to apply for
  credit.
• The terms and conditions of a credit card contain
  valuable information, vital to understanding your
  agreement with the creditor.