Penalty APR / Default APR Flashcards
What is the Penalty APR / Default APR?
The Penalty (or Default) APR is the interest rate that is applied to either a portion or the entirety of your balance once your credit card is in default.
What does it mean when you are in Default?
Violation of your terms and conditions agreement; failure to pay your loan / credit card as agreed.
When can the Penalty (or Default) APR be applied to your entire balance?
When you become 60 days delinquent in making a minimum payment.
What is the Island Approach?
The WalletHub Island Approach is a theory for credit card use that suggests that consumers should use different credit cards to meet each one of their specific financial needs. This approach is built upon the idea of compartmentalization and suggests that by secluding different expenses and types of payments, almost as if they are on their own islands, consumers can address them in the most cost-effective, strategic manner possible. As a result, they will minimize interest costs, gain increased financial control, build discipline and maximize their credit card rewards.
The WalletHub Island Approach applies to every type of consumer, but its logic and value can bee seen most clearly by separating people into two broad groups: those with revolving credit card debt and those who pay all their credit card bills in full every month.
Given the exclusion of small business credit cards from the Credit CARD Act, such sards should not be used for ____? Rather, they should only be used for ____ that you will be able to pay off in full each month?
Business funding purposes
Everyday purchases
