Credit

Buying/Paying Terms

Impulse Buying

When you don’t think about the purchase before you buy it.

Buying Plan

A method for making good business decisions. Will help you stretch your limited resources and help prevent buyers remorse.

Credit

The ability to make purchases with the promise that the money will be repaid later.

Credit Cards

A card issued by a bank, retail store or business that allows the card holder to repeatedly purchase products and services on credit.

Service Credit

The ability to receive services and pay for them later. Examples of service credit include the use of electricity, water, sewer, and other utilities.

Bank Credit Cards

Credit cards that are available from from banks and other companies. These cards are issued through a provider

Store Accounts

Department store, gas companies, and other retail merchants may offer their own credit accounts. Store accounts allow you to charge items only at that store.

Charge Cards

Pay the full balance each month. THere is NO interest or service fees. Often have a large annual fee. Example: American Express.

Revolving Credit

Account holder can charge to the account as foten as desired, up to a certain dollar limit. Make monthly payments. Account can have a rolling balance.

Charge

Money borrowed using a credit card.

Interest Rate

The percentage you pay on the money you have borrowed.

Fixed Rate

Interest rate that does not vary. Rate will stay the same from month to month. However, CC companies still can increase your rate when providing you with a written 30 day notice.

Variable Rate

Interst rate can change often. Rates typically go up when rates in general go up.

Payment Due Date

The date by which the credit card company must receive your payment by.

Outstanding Balance

The amount of money you still need to repay.

Finance Charge

The interest payment you owe on the credit card balance.

Grace Period

A period of time, generally 20-25 days, before a credit card company starts charging you interest on a purchase.

Late Fee

A penalty you are charged for not making your minimum payment by the established payment due date.

Annual Fee

The amount of money the credit card issuer charges you for having the credit card account each year.

Cash Advance

Money you are allowed to obtain in the form of cash through the use of an ATM or bank at a higher interest rate.

Cash Advance Limit

The total amount of money you are allowed to take from the account in the form of cash.D

Daily Finance Charge

The interest rate you pay each day on the outstanding balance.

Annual Percentage Rate

The yearly interest rate you pay on the credit card balance.

Minimum Payment

The least amount you can pay on the card and still keep your account in good standing.

Average Daily Balance

The average amount you owe on the credit card during each day of the billing cycle.

Over the Limit Fee

A penalty fee that i charged due to charging over your credit limit. Typically this will cause an increase in your interest rate.

Credit Bureau

Businesses that gather, store, and sell credit information about consumers to their business members. 3 main bureaus: TransUnion, Experian, Equifax.

Credit Limit

The maximum amount of money that a credit card issuer will allow you to borrow or charge.

Credit Rate/Score

Numberic rating that is compiled on a point system by the credit bureaus. Credit scores can range from 350-850.

Introductory Rate

A temporary, lower annual percentage rate, after which the APR is raised.

Balance Transfer

When the outstanding balance of one credit card (or several credit cards) is moved to another credit card account. Note: There is typically a fee associated with this transaction.

Cardholder Agreement

The printed agreement that provides the terms and conditions of a credit card account. It is a binding agreement between card issuers and their customers.

Billing Cycle

The time between billing statements, usually 28-31 days.

Credit Report

A report that is compiled by one or more of the credit bureaus that details credit history, credit inquiries and facts about all accounts ever opened with respective credit lines and on-time or late payment behavior.