Dangers of Credit Cards. Created by Alexander Antipov. My story with a credit card. Got my first credit card during Sophomore year with $1000 credit line Didn’t know much about interest or how credit cards worked, at the time felt like free money
Created by Alexander Antipov
An annual (yearly) fee charged by a credit card company each year for use of a credit card
The interest rate charged on credit card balances expressed in a standardized, annualized way. This rate is applied each month that an outstanding balance is present.
The card member agreement provides the terms and conditions of a credit card account.
The amount of money that can be charged to a credit card account. A credit line on which little has been borrowed -- leads to a higher credit score.
Credit card bills have a due date. If your credit card payment does not arrive -- and get posted -- by the due date, you will be charged a late fee.
A finance charge is the total cost of borrowing, including interest and fees, expressed in a dollar amount.
An annual percentage rate that does not change throughout the year, unlike an introductory APR that changes after a specific period of time
The grace period is the time during which you are allowed to pay your credit card bill without having to pay interest.
You will be charged a minimum finance charge if the calculated amount of your finance charge is less than the minimum finance charge set by your credit card company for a billing cycle.
The lowest amount of money that you are required to pay on your credit card statement each month.
A fee charged when your balance goes over your credit limit.
Secured credit cards are those that require collateral (property, such as a house, car or deposit of money) for approval . Can be dangerous if used without caution.
Common name for the document in which credit card issuers describe in detail their practices.
Universal default is a common practice among credit card issuers that allows them to increase cardholders' interest rates for any change in risk profile with any lender.
The most common type of credit cards, they are not secured by collateral.
With variable-rate cards, the APR changes when interest rates or other economic indicators change. Also known as a floating rate.
Profits or Losses at Top 10 U.S. Credit Card Issuers in 20081. Chase: $780 million profit 2. Bank of America: $520 million profit3. Citi: $530 million loss4. American Express: $850 million profit5. Capital One: $1.00 billion profit6. Discover: $710 million profit7. Wells Fargo: $990 million profit8. HSBC: $520 million profit9. US Bank: $1.07 billion profit10. USAA: Not listed(Source: Nilson Report, March 2009)
93 % of credit cards allowed the issuer to raise any interest rate at any time by changing the account agreement. (Source: Pew Safe Credit Cards Project, March 2009)
In 2006, there were nearly 1.5 billion credit cards in use in the U.S. with a population of 300 million. A stack of all those credit cards would reach more than 70 miles into space -- and be almost as tall as 13 Mount Everests. (Source: NY Times, Feb. 23, 2009)
The average credit card indebted young adult household now spends nearly 24 percent of its income on debt payments. (Source: "Generation Broke: Growth of Debt Among Young Americans")
Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009