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The most popular of all types of credit are credit cards. Having a credit card in your possession can be
considered a symbol of maturity and of being a responsible adult. Trying to decide what type of credit card
to obtain can be tricky. There are many different plans and types of credit cards available. This section
will give you a better understanding of credit cards and hopefully allow you to make an informed decision as
to what credit card to obtain.
Credit Card Lingo
Here we will explain what some of the common terms used in the credit card world.
Annual Percentage Rate (APR): This figure represents how much it is going to cost you to use a particular
credit card. The higher the APR, the more it is going to cost you in financing charges. You are also advised
how this interest rate is applied to your outstanding balance to determine the cost of borrowing. This
information is provided when you first obtain your account and is noted on your statements.
There are some credit cards which have a variable interest rate. These cards are tied to some sort of index
which rises or falls depending on the behaviour of the economy. If you are thinking of obtaining a credit card
of this type, be sure you understand how much and how often the interest rate will change.
Grace Period: If you plan to pay off your credit card balance every month, be sure to get a credit card that
has a grace period. For example, if you have an account which has a grace period of 30 days, then so long as
you pay the balance owing in full within 30 days of receiving your bill, you will not be charged any interest.
Annual Fees: Watch out for annual fees. Most gold or platinum cards charge an annual fee which can range
from $25 to $100 annually. Make sure you find out if there are any annual fees.
Other Fees: A credit card may also involve other type of costs. You may face additional charges if you
obtain a cash advance, if you are late on a payment or if you go over your credit limit. These fees can
add up, so be sure you are aware of what a credit charges.
Method of Interest Rate Charges: A very often overlooked feature of a credit card is how the interest rate
is charged. Two cards may have an identical APR, but depending on how the interest is charged, one may be
more expensive than the other. ( See Interest Rates )
Your Rights
Most people are not aware of their legal rights associated with holding a credit card. Here is a brief summary:
- Your account must be credited on the same day that a payment is received
- You can request a refund if your account shows a credit balance greater than $1
- If you believe that that an error has occurred on your bill, you must notify them in writing within 60 days
and must provide an answer with 90 days after they receive your complaint. While the card company is
investigating, you do not have to pay the amount in question.
- If your account is used with your consent, the most you can be held liable for is $50. This is true even
- If a thief uses your card before you report it missing.
Protect Your Credit
To safeguard your credit card-and your credit record-make sure you:
- Never lend your card to anyone.
- Never leave your card or receipts lying around.
- Destroy all carbons and incorrect receipts.
- Never put your card number on a postcard or on the outside of an envelope.
- Never give your card number over the phone, unless you are certain the company or organization is highly reputable.
- Sign your credit card in ink as soon as it arrives.
- Keep a record of your card number, expiration date, and the phone number and address of the card company in a safe place, separate from your wallet.
- Do not sign a blank receipt, whenever possible.
- Draw a line through blank spaces on charge slips above the total so the amount cannot be changed.
- Open billing statements promptly and compare them with receipts you have saved.
- Write promptly to the credit card issuer if any questionable charges appear on your statement.
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