Managing Credit Cards

Study Notes

Review statements monthly to verify entries and pay by due date to avoid finance charges.
Pay minimum monthly payment or entire amount to avoid finance charges.

Consider annual fees, rate of interest charged on balance, length of grace period, and method of calculating balances.
Compare introductory rates, regular APR, cash advance fees, and late fees among different issuers.

Retail charge cards: second largest category, offered by department stores and oil companies, with preset credit limits.
Debit cards: work like a check, accessing checking account, with no line of credit and greater liability exposure if fraudulently used.
Prepaid cards: a type of debit card with a fixed amount, not accessing checking account.
Revolving credit lines: offered by banks or other financial institutions, with higher credit lines and lower interest rates than credit cards.

Credit extended to consumer prior to a purchase, with a specified credit limit.
Offered by retailers and financial institutions, with monthly credit statements and the option to pay balance in full to avoid interest.

High interest rates, annual fees, transaction fees, late-payment fees, over-the-limit fees, balance transfer fees, and foreign transaction fees.

Reward cards: offer frequent flyer programs, auto rebate programs, and other merchandise rebates.
Affinity cards, secured (collateralized) credit cards, and student credit cards.