Notes

Unit 4 Lesson 3
Credit Cards
Affinity Card - A credit card sponsored by a third party that receives some benefit from each transaction. For example, a credit card with a college name on it might be offered to students and alumni with the college receiving a percentage of all transactions charged to the affinity card.
•Annual Percentage Rate (APR) - The cost of credit for one year, expressed as a percentage.
•Annual Membership Fee - A once-a-year cost or annual membership fee for having the credit card.
•Average Daily Balance - The daily balances for the month are added, then the total is divided by the number of days in the billing cycle to calculate how much interest you will owe for the month. New purchases may or may not be included, depending on the terms of the credit agreement.
•Billing Cycle - The number of days between your last bill and your current bill. It is usually 28 - 31 days.
•Billing Statement - Your periodic credit card bill. It summarizes all of your credit transactions for the month including charges, payments, finances charges, and outstanding balances.
•Cash Advance - A loan taken out by charging an amount of cash to your credit card. Interest for cash advances is usually higher than it is for purchases and there is usually no grace period.
•Cardholder Agreement - A written contract that states the terms that apply to the credit card.
•Chip Card/Smart Card - A card issued by a financial institution with an electronic chip embedded in it that can be programmed for frequent buyer reward programs or credit or debit card functions.
•Collateral - Savings accounts, insurance policies, bonds or other property that are promised to pay off a loan if payments are not made according to the contract. Also called security.
•Co-sign - To sign a credit agreement with someone and agree to pay for that debt if the other person does not pay.
•Credit Card - A card that allows you to pay all or a portion of the balance each month. It usually has a credit limit (or line of credit).
•Credit Line or Credit Limit - The maximum amount of credit you are allowed to use.
•Credit Union - A not-for-profit financial cooperative that offers a variety of savings and lending services to its members.
•Debit Card - Debit cards look like credit cards but they deduct money from a checking or savings account and transfer the funds to merchants electronically.
•Due Date - The day a payment is due to a creditor. After that date, a late fee can be charged and the payment can be recorded as late on your credit report.
•Fair Credit Billing Act - A federal law that applies to credit and charge card accounts to protect a borrower's right to dispute billing errors, unauthorized use of the account, and goods and services charged but not delivered satisfactorily.
•Finance Charge - The total cost of credit in dollars and cents including the interest, service fees, late fees, transaction fees, and any other miscellaneous charges.