Credit Cards Overview

These flashcards cover key aspects and terminology related to credit cards, including their functions, advantages, disadvantages, and critical financial terms.

Credit Card

A card that allows users to borrow money to make purchases, paid back with interest.

Credit Limit

The maximum amount of money that a bank will lend to a credit card holder.

Credit Approval

The process of assessing a borrower's ability to repay a loan based on credit rating and financial status.

Credit Rating

A measure of a borrower's creditworthiness, often used to determine credit approval.

Late Payment Fee

A charge incurred for failing to make a credit card payment by the due date.

Interest Rate

The percentage charged on outstanding credit card balances over time.

Debt Collectors

Agencies that pursue payments on debts that are overdue.

Credit Score

A numerical representation of a borrower's creditworthiness.

Annual Fee

A yearly fee charged by credit card issuers for holding the credit card.

Cash Advance

A service allowing cardholders to withdraw cash against their credit limit.

Rewards Program

A system that allows cardholders to earn points or rewards for spending.

Interest-Free Days

The period during which no interest is charged on new purchases if the previous balance is paid in full.

Balance Transfer Rate

The interest rate applied to amounts transferred from one credit card to another.

Advantages of Credit Cards

Benefits like building credit score and earning rewards.

Disadvantages of Credit Cards

Drawbacks such as high interest rates and potential for credit damage.

Purchase Rate

The standard interest rate applied to purchases made on the credit card.

Debits

Funds used from bank accounts to complete transactions, unlike credit.