Personal Finance Credit Card Review

What is the difference between closed-end credit and open-ended credit? Closed-end credit – is a one time loan.Open-end credit – credit is extended in advance.
What is a minimum payment? The smallest amount of a credit card bill that a consumer can pay.
List 3 advantages of using a credit card? A convenient payment tool.Useful for emergencies.Used for “big ticket” purchases.
List 3 disadvantages of using a credit card? Interest can be costly.Tempting to overspend.Risk of identity theft.
What is a debit card? A card that transfers funds electronically from one’s checking account to the store’s account to pay for a purchase.
Give 3 examples of positive credit card use Paying the balance in full each billing period.Paying the bill on time.Applying only for cards that are needed.
Give 3 examples of negative credit card use Poor use can lower credit score.Not paying off the balance each month.Buying items that are not needed.
How do you avoid paying interest on purchases? Pay the bill in full each month.
What is the difference between maintenance fees, transaction fees, and penalty fees? Maintenance fees – A charge assessed on some types of credit accounts. Transaction fees – A fee charged for a financial transaction.Penalty fees – A fee assessed for failure to comply with payment requirements.
What is the schumer box? It is a summary of the costs of a credit card in the United States, including terms and fees.
Why is it important to check your credit card statement every month? To be sure that no unauthorized charges have been made to the account and no errors are present in the charges.
Name and define 4 things found on a credit card statement A summary of account activity – lists charges and payments.Minimum payment warning – the minimum payment that can be made on the balance.Notice of interest rate changes – informs if the interest rate for the card has changed.Transactions – purchases and cash advances are listed.
What does FICO stand for? Fair, Isaac and Company.
What is your credit score used for ? The granting of credit by a financial institution.
How is a credit score important to use as a consumer? The higher the score, the easier it is to get credit.
What is considered a good score? 690 to 720
Come up with 5 credit guidelines to follow Make payments on time.Pay credit card balances in full each month.Use a card with no annual fee.Be aware of penalty and transaction fees.Keep your credit card number secret to avoid identity theft.
What is credit bureau? An organization that tracks a person’s habits in paying back borrowed money.
List 5 things you would use a credit card for? Purchases of food, clothing, airline tickets, restaurants and hotels.
What is the difference between a debit card and credit card? Charges made on a debit card are electronically deducted from one’s checking account upon use.Charges made on a credit card are paid when the bill is received, it is not automatically taken from one’s checking account.
What is credit worthiness? A measure of one’s ability and willingness to repay a loan.
What are some reasons you would be denied a credit card? Having a poor credit history.Being younger than age 21.Not having a job.
Explain the statement the credit card companies are not our friend Credit card companies are in business to make money from you.
What is the difference between a store credit card and a major credit card? A store credit card can be used only at that store or store chain, while a major credit card can be used at many/most stores.
What typically happens if a cardholder makes a late payment? A late fee can be assessed and the interest rate may be raised, the late payment is noted on your credit report and your credit score may drop.
How can a consumer avoid paying interest on a credit card? By paying the account balance in full and on-time each month.

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