Credit Card Basics What you need to know

Credit Card Basics What you need to know before signing up… 1

History of Credit Cards l Credits Cards started as department store credit cards – l Their use grew because customers spent 112% more using a credit card than if cash was used! (that still holds true today) 2

Credit Cards Terms and Conditions l Annual Percentage Rate (APR): interest rate you pay on the credit card as a yearly rate. l Variable Rate: interest rate you pay that changes according to a set formula: such as Prime Rate +3. l Fixed Interest Rate: interest rate you pay that doesn’t change, without a 15 day notice from the credit card company. 3

Credit Cards more Terms and Conditions l Grace Period: period in which finance charges do not accrue if you do not carry a balance. l Payment Due Date: last day that payment is due without penalty. l Minimum Monthly Payment: lowest amount that you can pay toward your credit card balance, each month. 4

Credit Cards and more Terms and Conditions l Purchase APR Rate: interest rate that you pay on purchases made using your credit card, if you don’t pay the balance in full. l Cash advance APR: interest rate charged on getting cash from your credit card. Interest is started immediately on the cash advance. l Balance Transfer: ability to transfer the balance from one credit card to another. 5

Credit Card Typical Offers l l l Low Introductory Rates: a low or 0% rate on your credit card balance for a limited time. No Annual Fee: Credit cards that you don’t have to pay a fee to use; caution, can require a minimum number of purchases or pay an “inactivity fee”. Rewards Cards: purchases you make earn you “rewards” for using the credit card [such as, airline travel, store credit certificates, even cash back. ] 6

Credit Card Summary l Know what you are signing up for as credit card companies are in the business of making money by lending you money. 7