Test 2 Flashcards
List 4 Credit Card Advantages
- Convenience
- Fraud Protection
- Bill Consolidation
- Benefits/Rewards
List 4 Credit Card Disadvantages
- Fraud
- Going Over Budget
- High Interest Rates
- Increased Debt
List 3 Debit Card Advantages
- Easy to Obtain
- Convenient
- Widely Accepted
List 3 Debit Card Disadvantages
- Less Protection
- No Grace Period
- Check Book Balancing Required
Debit Card vs Credit Card
Debit Cards - allow bank customers to spend money directly from their bank accounts
Credit Cards - allow consumers to borrow money from an issuer and pay it back
What are the 3 C’s?
1) Character
2) Capital
3) Capacity
Character
Common Questions Asked:
1) Have you used credit before?
2) Are your bills paid on time?
3) How long have you lived at your present address?
4) How long have you had a credit card for?
Capital
- Credit Card companies evaluate your worth
Money earned, assets, etc.
Capacity
Refers to your ability to repay your debt
What do the 3 C’s make up?
Credit Score
Credit Line
The maximum amount of credit extended to a borrower
Annual Percentage Rate (APR)
The annual rate charged for borrowing or earned through an investment and is expressed as a percentage that represents the actual yearly cost of funds over the terms of a loan
Balance
The amount available in an account for withdrawal or use
Cash Back Rewards
Denoting a form of incentive offered to buyers of certain products where they receive a cash refund after making their purchase
Annual Fee
Any fee that is charged on an annual basis
Minimum Payment
The smallest amount of a credit card bill that a consumer can pay
Credit Score Ranges
300-599: Poor 600-669: Average 670-699: Good 700-729: Great 730-850: Excellent
How to Keep Your Credit Score Strong
- Complete credit applications accurately
- Use your credit cards responsibly (don’t exceed credit limit)
- Pay minimum amount of balance on time
- Pay bills on time
Fair Credit Reporting Act
- Regulates collection of credit information and access to credit report
- Ensures fairness, accuracy, and privacy of personal information
- Enables customers to get free credit scores
Equal Credit Opportunity Act
- Prohibits discrimination on the basis of race, color, religion, national origin, gender, marital status, age, or received public assistance
Fair Credit Billing Act
- Protects consumers from unfair credit billing
- Provides guidelines for consumers and creditors to manage billing statement disputes
Electronic Fund Transfer Act
- Passed to establish consumer rights, liabilities, and responsibilities of participants
Fair Debt Collection Practices Act
- Prohibits debt collectors from using abusive, unfair, or deceptive practices to collect money from you
Discover Credit Cards
- 4 types
- No annual fee
- Cash-back incentives (1% back on every purchase)
- 0% introductory APR for 12 months
- Interest rate: 11.24%-23.24%
Chase Credit Cards
- 8 types
- 0% introductory APR for 12 months
- No annual fee
- Cash-back incentive
- Balance transfer fees
- Interest rate: 16%-23%
