DEFINITIONS
What is a credit card?
A form of revolving open-end credit that can be used repeatedly up to a limit
What happens when you use a credit card?
You borrow money to make a purchase
One advantage of credit cards?
examples: convenience, easy to carry, earn credit
What was the Credit Card Act of 2009 designed to do?
Protect consumers
Jordan borrows $80 and pays back $88 — interest?
$8
What is a credit provider?
A financial institution that makes credit available
What do you receive each month?
A billing statement
What happens if you pay in full each month?
No interest is charged
What did it limit?
Unfair interest rate increases and fees
Monthly interest rate if $8 on $80?
10%
What is APR?
The amount of interest attached to the card
What happens if you don’t pay the full balance?
You are charged interest
How do credit cards help your credit score?
By building credit history when used responsibly
How does it protect people under 21?
Requires proof of income or co-signer
Approx annual rate from 10% monthly?
120%
What is a grace period?
Time when no interest is charged
Why are credit cards easy to abuse?
Because they are easy to access and use
One risk of electronic billing?
Cybersecurity risks / missed emails
What is a penalty APR?
A higher rate for missing payments
Mia sells $360 item with 3% fee — how much does she get?
$349.20
What is overdraft protection?
Allows spending over the credit limit with fees
What are the some of the top 3 credit card providers in the U.S. that we talked about?
Chase, American Express, Capital One
Why do stores offer store-only credit cards?
To increase spending and earn interest
What is an introductory rate?
A temporary low interest rate
Javier sells $420 item with 2.5% fee — how much does he get?
$409.50