CREDIT / CREDIT
Credit Card Terms / Credit Help
(Annual Percentage Rate) - A yearly interest rate
which includes all fees and costs associated with obtaining a loan.
Disclosure of APR is required by law. It is calculated so that
borrowers can take advantage and compare the APR of prospective
Air Miles -
accumulated by use of airline affiliated cards to obtain miles
Amount Financed -
Total Amount being loaned to borrowers which could include cost
plus other fees.
Application Fee - A
fee associated with processing the application of a borrower to
lender oriented jobs to determine eligibility.
ATM Access Fee - A
fee associated with the borrower which can be accessed for ability
to access monies from an automated teller
Balance Transfer -
A way to move an amount of unpaid fees to another
Fees - A fee associated with the process of balance
transfer used to entice/defer borrowers to transfer
Billing Cycle - The
number of days between old payment and current payment of
Billing Statement -
The monthly bill which gives pertinent summary information of the
month’s activity and bill due date.
Cash Advance Fee -
The fee associated with accessing cash where they is no grace
period which entails generally higher rate charges which can be
accrued at time of cash withdrawal or on next billing
Closed Account Fee
- Fee associated with early termination of an
Consumer Credit Counseling
Service - Programs which are able to work with creditors
and borrowers to work out ways to repay debt over a reasonable
amount of time.
Credit History - A
historical look at a borrower’s payment
Credit Limit - The
maximum allowable limit of a credit account. Suggested limits do
not exceed the amount of 20% of income.
Credit Rating - A
decision based upon someone credit score.
Credit Report - A
look at a person’s spending and saving habits to determine
Credit Score -
Number calculated between 300 - 800 based upon a person’s
Credit Union - A
financial institution that serves like a bank which can offer lower
rates. It is usually owned by the people who do business with
Debit Card - A card
that is directly related to a borrowers account.
- Means of combining multiple loans to one loan with smaller
monthly payments to be paid over an extended amount of
Discount Rate -
Rate at which banks borrow from the Federal Reserve. To the banks
advantage to keep a low discount rate because discount rate is
disclosed for borrower comparisons.
Down Payment - An
initial payment to get an account started in exchange for goods or
Electronic Funds Transfer
(EFT) - Way of electronically transmitting funds
to pay for payments electronically.
Effective Federal Funds
Rate - Interest rate that the Federal funds are traded at
on an average basis which can change daily.
Encryption - Use of
technology to scramble information in regards to private and
financial information so that only specific user can view
Federal Deposit Insurance
Corporation (FDIC) - An agency which determines
the safeguard of each personal account up to a specified financial
amount which is required of all national banks for protection of
Finance Charge -
The cost of being able to use a credit card which consists of fees
and interest related fees.
Grace Period - A
period of time that the lender offers to the borrower where there
is no interest accumulating between transaction date and billing
date. The average grace period is between 20 - 30 billing
Gross Income - The
total income earned before taxes.
Interest - A
portion of the money used by a borrower for lending
Interest Rate - The
percentage rate at which loans are charged per
Internet Bank - A
bank that is accessed on the internet which usually produces lower
Introductory Rate -
A lower interest rate which is charged to new customers to suit
their borrowing needs. Usually for a specific time period of days
and once over, the borrower’s rate is increase to their
Late Charge/Fee - A
fee accessed to the borrower for not paying by the due
Line of Credit - A
form of agreement that will let a borrower spend up to a maximum
limit based upon a borrower’s credit
Minimum Payment -
The minimum amount to be paid to keep an account active without
late fees. The usual rate is about 2% of the
Online Bill Payment
- Offers the ability to setup bills to be paid automatically and
virtually without the use of hardcopies such as envelopes, stamps,
- A fee accessed for going over the credit limit.
Penalty Rate - An
increased APR due to excessive amounts of late
Prime Rate - Rate
at which banks will lend money to its most favorable
Principal - The
amount of money which has been borrowed.
Remaining Term -
The amount of time it will take to pay off the
Secured Card - A
card that is secured with a savings account attached to the card
for the ability to make payments on. Usually used to establish or
build good credit.
Secured Debt - The
ability to have a property reprocessed in case of non
Transaction Date -
The date of exchange of monies for a product.
Unsecured Debt -
Debt that does not require any collateral.
Q. What happens if I fall behind in
my credit card payments?
A. You can receive
a negative on your credit history which will stay there for up to 7
years even if eventually it is paid off in full. This poor credit
history can affect your ability to rent an apartment or buy a car
because of your spending and payback history. Insurance companies
will also be less likely to give you discounts for having good
Q. Why should college students have a credit
A. Credit cards can
be seen as useful to college students because they can learn how to
use them correctly. Proper use of credit cards and on time payments
within one’s credit limit can help them to establish good
credit so that when its time for them to graduate they can do
certain things such as rent an apartment in their name without
having a parent to co-sign or have to pay a huge deposit. They will
be able to take advantage of having good credit at an early age
while learning how to balance their spending with their ability to
make their own money.
Q. What steps do I take to establish a good
A. 1. Determine your own
budget. Often times we get caught up with wants and needs, but the
ability to manage our own money is just as valuable as making
2. Use it rarely. Do not use your
credit card for frivolous spending such as fast food or restaurant
bills. Use it for purchases that will mean something to you such as
a computer or somewhat large purchases so that the interest will be
on one rather than multiple smaller things.
3. Pay on time. Be sure to keep up
on your monthly payments to avoid things like late and penalty
fees. Try to set up a day for each month on that same day to sit
down and pay bills, this will help with the consistency of knowing
when to pay and how much you have paid on our balance.
4. Avoid things such as ATM access
fees and cash advance fees. Things options are good features to
have on a credit card, but may limit your ability to pay the bill
when it comes because interest starts to calculate as soon as your
receive the cash at very high interest rates. Too many cash
advances can really set you back once you receive your
5. Pay more
than minimum. Try to map out your bill payments to be as much as
possible over the minimum. By paying more of the debt as early as
possible you can reduce your interest payments. Some cards even
offer promotions that if you pay within the grace period no
interest will be accessed which is to your advantage.
How can I protect myself from identity theft in
This is a
question that is asked by many people today because the age of
technology is so advanced that it seems like there are not
absolutely ways of keeping your personal information completely
confidential. There are ways to help safeguard your credit history
and personal information.
As with any
confidential information keep it on a “need to know”
basis. The best way is to always safeguard yourself by asking the
simple question of, “Why do you need my social security
number?” Your social security number is something that is
your identification number to everyone else and unfortunately if in
the wrong person’s hand they could do some damage to you.
Always be on guard about your social security number.
Next, keep a
good eye on your credit history or reports. You can access them by
the three major credit history companies (Equifax, Experian, and
TransUnion) for a small fee in most states for about nine bucks.
Check credit reports at least once every six months and all three
credit agencies may have different reports (a reminder to keep in
closely all your open accounts and check recently closed accounts
to protect yourself for any activity that you didn’t approve.
Don’t be hesitant to dispute an approval or file a claim.
Most of the time your credit card company will take your side in a
case based upon the Fair Credit Billing Act.
shred any receipts, pre-approved offers, statements after use of
them so that it can not be read by anyone. Also, check those
documents so that they match your name and current information as
you have told or wrote them exactly.
If you are
conducting business via the Internet upon purchasing, always check
to make sure that there is a padlock in the right bottom side of
the web page that shows the website is secure and encrypted while
you’re at the site. A secure website can also be identified
by an “https://” in the address bar rather than
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