Beruflich Dokumente
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► Credit
Credit Cards
Charge Card
► Debt
Stored Value Card
ATM/Check Card
► Smart Cards*
The Basics
■Debit Cards
allow access to checking account via ATMs
and point of sale (POS) terminals
amount is deducted from checking account
not a charge card, must have the funds
available
■“Smart Cards”
these cards store personal information
may be “loaded” with a certain dollar value
Credit Cards
What You Need To KNOW
Topics covered
► Types of credit cards
► Card offers
► Card terms and conditions
► Credit card billing statements
► Using credit cards
► Card fees
► Optional services and card benefits
What are credit cards good
for?
► Emergencies
► Big ticket items
► Establishing credit
► Safer than cash
► More purchasing power
► Protection from fraud on the Internet
Types of Cards
Credit cards
► Revolving Credit
Credit line can be used up to the credit
limit
Pay charges in full each month, pay just
the minimum or make a partial payment
greater than the minimum due
Credit limit goes up and down as
purchases and payments are made
Charge cards
► Payall charges in full every month by
the due date
Cannot carry a balance
No balance = no interest
Some charge cards allow a balance carry-
over for specific purchases, such as travel
charges
No preset spending limits or credit limits
Secured credit cards
► Guaranteed by money deposited in an
account
Credit limit usually equals the amount of
the deposit
Can be used by people with credit
problems to reestablish good credit
Sub-prime credit cards
► Marketed to people who have poor
credit
Typically have very low lines of credit,
large upfront fees and high interest rates
Prepaid credit cards
► Alsocalled stored value cards
► These are used by
retailers as gift cards
travelers as a safe way to get funds on
the road
parents who want to give their kids the
convenience of a credit card without the
risk
Card Offers
Types of offers
► Pre-approved
► Invitations to apply
Offers come in the mail, by telephone and
online
► Instant credit at stores
Pre-approved offers
► Personalized and based on credit
history
Federal law requires that pre-approved
solicitations contain a guaranteed offer of
credit
The only exception is if consumer has
experienced a serious decline in
creditworthiness since the offer was made
Invitations
► Ask consumer to apply for a card
Does not require a firm offer of credit
Intended to interest consumers in
applying
Instant credit
► Salespeople often ask you if you want
to get the store’s credit card
► Get a discount on purchases
► If the shopper’s credit is good, credit is
issued on the spot
Important Terms
& Conditions
Compare basic terms
► Look for a box with:
interest rates
grace period
annual fee
► This box is:
required by law
often headed with the words “disclosures”
or “summary of terms”
Look closely
► Credit limits
While the offer of credit may be
guaranteed, the actual credit limit may
not be
► Balance transfers
If you don’t know your credit limit, it’s
difficult to know if you can transfer
balances from another card
Cardholder agreements
► Sent with every new card
► Legal contract between consumer and
the card issuer
► By using the card, consumer agrees to
honor the terms and conditions in the
agreement
Subject to change
► Cardterms and conditions are subject
to change at any time
Change notices are usually sent by mail,
along with the monthly statement
Consumers should review everything sent
by issuer, even if it looks like junk mail
Using the card after receiving the notice
means that you accept the changes, even
if you have not read the notice
Card billing & payments
► Each month, the credit card user is
sent a statement indicating the
purchases undertaken with the card,
any outstanding fees, and the total
amount owed. After receiving the
statement, the cardholder may dispute
any charges that he or she thinks are
incorrect .
Card billing & payments
► Otherwise, the cardholder must pay a defined
minimum proportion of the bill by a due date, or
may choose to pay a higher amount up to the entire
amount owed. The credit provider charges interest
on the amount owed (typically at a much higher
rate than most other forms of debt). Some financial
institutions can arrange for automatic payments to
be deducted from the user's bank accounts, thus
avoiding late payment altogether as long as the
cardholder has sufficient funds.
Card billing & payments
► Credit card issuers usually waive interest charges if
the balance is paid in full each month, but typically
will charge full interest on the entire outstanding
balance from the date of each purchase if the total
balance is not paid.
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Record Updates
Interest and other
Charges
Annual percentage rate (APR)
► Card’s interest charge, expressed as a
yearly rate
► The interest rate is the cost of borrowing
money from the credit card company
► Your card’s interest rate is usually for
purchases — if you withdraw cash you
might be charged a higher interest rate
Variable rates
► Ifcard has a variable rate, the APR will
change when interest rates go up or down
► Variable interest rates change according to a
set formula using an “index” and a “margin”
► The most common index is the Prime Rate
published in the business sections of major
newspapers and online
Prime Rate
► The interest rate banks charge their most
qualified borrowers
► Prime Rate is the “index” most commonly
used to set interest rates on variable rate
credit cards
Other indexes used include the London
Interbank Offering Rate (LIBOR)
Indexes are published in the business
sections of major newspapers and online
Fixed rates
► Despite their name, fixed interest
rates can change as early as 15 days
after the company gives notice of a
new rate
Default or penalty rates
► Higher interest rates charged for late
payments or decline in credit
► Default factors
Late payment
Bounced check
Reduction in credit score
► Higherrate will apply to the existing
balance, not just new purchases
Cash advance APR
► Most cards charge a higher interest
rate for cash advances