Fact Sheet – Credit Cards
Credit Card Key Terms to Know:
Types of Credit Card Accounts:
• Annual Percentage Rate (APR): expresses
the cost of credit on a yearly basis as a
percentage rate.
• Bank Credit Card Account: the lender is the
bank, or credit union, through which the card
is offered.
• Finance Charge: total dollar amount paid
to use credit.
• Prestige Card: brand name card such as
“gold,” “silver,” or “platinum;” usually have a
higher limit and higher fees.
• Annual Fee: charges collected against
cardholders for the privilege of having an
open account but that are not included in the
advertised APR.
• Number of Days in the Grace Period:
period (in days) for which charges and
payments can be made without any penalty
• Late Payment Fee: applied when the
borrower fails to make a payment by the due
date.
• Credit Line/Limit: the total amount that
can be charged on the credit card.
The Credit Card Accountability
Responsibility and Disclosure Act:
The CARD Act of 2009
• No interest rate increases for the first year
an account is open
• No interest rate increases on existing
balances (except: when there is a variable rate,
end of a promotional-rate period, payment is
60 days late, or debt settlement agreement)
• Lender must notify cardholder of interest
rate increases with 45 days advance notice
• No excess limits on fees
and penalties
• Prohibits unreasonable
due date practices
• Protection for
consumers under age 21
• Retail Credit Card: allows a customer to
make purchased on credit at any of the outlets
of a particular retailer.
• Travel & Entertainment Card: cards are used
by business users for food and lodging
expenses while traveling; all charges must be
repaid within 30 days.
• Reward Card: issued cards have special
features that offer rewards like “points” or
“cash back”; may have an annual fee.
Credit Cards Tips:
1. Keep a list of your credit card numbers,
expiration dates, and the phone number of
each card issuer in a secure place.
2. Never sign a blank receipt. Draw a line
through any blank spaces above the total
when you sign receipts.
3. Never give out your credit card number
over the phone unless you have initiated the
call.
4. Sign or write “See I.D.” on new cards as
soon as they arrive. Cut up and return
unwanted cards to the issuer.
5. Leave infrequently used cards in a secure
place.
Sources: Garman & Forgue. (2011). Personal Finance.
Federal Citizen Information Center. (2012). Consumer Action Handbook.