Money, Explained: Credit Cards Flashcards
How did the credit card start?
Invented in 1950, the Diners Club card is known as the first modern-day credit card. The idea came from Frank McNamara, a businessman who’d forgotten his wallet while out to dinner in New York. He and his business partner Ralph Schneider would soon invent the Diners Club card as a way to pay without carrying cash.
What is a credit card and how does it work?
Credit cards offer you a line of credit that can be used to make purchases, balance transfers and/or cash advances and requiring that you pay back the loan amount in the future.
Is credit basically a loan?
A line of credit is a preset borrowing limit that can be used at any time, paid back, and borrowed again. A loan is based on the borrower’s specific need, such as the purchase of a car or a home. Credit lines can be used for any purpose. On average, closing costs (if any) are higher for loans than for lines of credit.
What is a credit score?
A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bureaus.
Transactor vs revolver
Transactors do not carry a balance from month to month; they always pay their credit card bills in full by the due date, so they are not required to pay interest or late fees. The opposite of a transactor is a revolver—a consumer who carries a credit card balance from one month to the next.
Who qualifies for Amex Black Card?
How much do you have to make to get Amex’s black card? There aren’t any income requirements per se, but you most likely need to be a high spender on your Amex cards. If you’re in the ballpark of $250,000 to $500,000 in annual spending across all your open Amex cards, you may qualify for the Centurion card.
What are examples of cash-only businesses?
Examples of cash-only businesses include:
Restaurants.
Coffee shops.
Street vendors.
Lawn services.
Babysitters.
Vending machines.
Laundromats.
Do cash-only businesses pay taxes?
Accepting cash and paying in cash is legal. Making cash transactions to avoid taxes is not legal. The IRS actively pursues businesses who underreport income and who pay in cash to avoid payroll taxes and other tax reports and payments.
Why are some business cash-only?
To avoid the fees associated with processing the transactions.
What do we mean by interest?
Interest is the price you pay to borrow money or the cost you charge to lend money. Interest is most often reflected as an annual percentage of the amount of a loan. This percentage is known as the interest rate on the loan.
What is the target market for credit card?
Credit card issuers have traditionally targeted consumers by using information about their behaviors and demographics. Behaviors are often based on credit bureau reports on how a person spends and pays over time; customers are typically categorized as transactors, revolvers or subprime.
What marketing tactics do credit card companies use?
Introductory low APR rates– One of the most common credit card tricks is to lure new customers in with low APR rates that eventually increase significantly after you’ve created a purchase history and habit of use. Low interest rates often carry with them hidden fees and high penalties for late payments.
What is anchoring bias?
Anchoring bias is a cognitive bias that causes us to rely too heavily on the first piece of information we are given about a topic. When we are setting plans or making estimates about something, we interpret newer information from the reference point of our anchor, instead of seeing it objectively.
