Credit Basics
The maximum you can borrow at any one time.
What is credit limit?
what is annual fee?
Another name for prestige card?
What is platinum or gold card?
To take out using your credit card instead of making a purchase
what is a cash advance?
Why should you set your own credit limit ?
To stay below your official credit limit and avoid high interest debt.
What happens if you exceed your credit limit?
Your purchase maybe denied, or you could be charged over-limit fees.
What range are most annual fees?
Around $20-$70 per year
what benefit of prestige cards offer?
Extra perks like travel insurance, purchase protection, or special warranties.
define balance transfer
Moving debt from one card to another
, often with a low temporary interest rate
Why pay credit bills first?
Interedt rare is high so they save money
What is overdraft protection
A feature that lets you spend slightly over your limit to prevent denials, but can have high fees.
Name one type of incentive cards offer.
Cash back, airline miles, charity donations ,gift points, gas discount
Minimum number of days for a grace period?
Atleast 21 days
Typical balance transfer fee percentage
Around 2%-4% of the transfer amount
this is a smart way to avoid interest charges
Pay the full balance each month within the grace period.
How does keeping your balance near the limit affect your credit score?
It lowers it beucase it shows high credit utilization
What can make a company waive your annual fee?
Good credit score, consistency/using your card more often
define grace period
The time you aren’t charged interest on new purchases if you pay in full
Why are cash advances costly?
They don’t have grace periods and charge high interest immediately
paying only the minimum payment results in what
You’ll stay in debt longer and pay a lot of interest
Why can overdraft fees be risky?
They are expensive and should only be used for emergencies
Why do companies offer incentives like points or miles
To encourage people to use their cards more often
this happens after a grace period is up and u still haven’t paid the bill
Interest starts to add up on your unpaid balance.
this happens when teaser interest rates expire
The interest rate jumps back to a higher normal rate.
Give us two tips for responsible credit use.
Pay on time
keep balances low
dont max out cards
avoid cash advances
read offers carefully