Annual
fees: Many credit card issuers charge an annual fee
for giving you credit, typically $15 to $55.
Annual
percentage rate (APR): The APR is a measure of the
cost of credit expressed as a yearly interest rate.
Usually, the lower the APR, the better for you. Be
sure to check the fine print to see if your offer has
a time limit. Your APR could be much higher after the
initial limited offer.
Bankruptcy: Bankruptcy is considered the credit solution
of last resort. Unlike negative credit information
that stays on a credit report for seven years, bankruptcies
stay on a credit report for 10 years. Bankruptcy can
make it difficult to rent an apartment, buy a house
or condo, get some types of insurance, get additional
credit, and sometimes, get a job. In some cases, bankruptcy
may not be an easily available option.
Budgeting: In many cases people design and stick
to a budget to get their debt under control. A budget
is a plan for how much money you have and how much
money you spend. Sticking to a realistic budget allows
you to pay off your debts and save for the proverbial
rainy day.
Charge card: If you use a charge card, you must
pay your balance in full when you get your regular
statement.
Credit: Credit is more than just a plastic card
used to buy things. It’s your financial trustworthiness.
Good credit means that your history of payments, employment
and salary make you a good candidate for a loan, and
creditors (those who lend money or services) will be
more willing to work with you. Having good credit usually
translates into lower payments and more ease in borrowing
money. Bad credit, however, can be a big problem. It
usually results from making payments late or borrowing
too much money, and it means that you might have trouble
getting a car loan, a credit card, a place to live
and, sometimes, a job.
Credit card: You can use a credit card to buy
things and pay for them over time. But remember, buying
with credit is a loan; you have to pay the money back.
What’s more, if the credit card company sends
you a check, it’s not a gift. It’s a loan
you have to pay back. In addition to the cost of what
you bought, you will owe a percentage of what you spent
(interest) and sometimes an annual fee.
Credit counseling: Many universities, military
bases, credit unions and housing authorities operate
nonprofit financial counseling programs. Some charge
a fee for their services. Creditors may be willing
to accept reduced payments if you are working with
a reputable program to create a debt repayment plan.
Credit report: Your credit payment history
is recorded in a file or report. These files or reports
are maintained and sold by consumer reporting agencies
(CRAs). One type of CRA is commonly known as a credit
bureau.
You have a credit record on file at a credit bureau
if you have ever applied for a credit or charge
account, a personal loan, insurance or a job. Your
credit record contains information about your income,
debts and credit payment history. It also indicates
whether you have been sued, arrested or have filed
for bankruptcy.
Credit scoring: Most creditors use credit scoring
to evaluate your credit record. This involves using
your credit application and report to get information
about you, such as your annual income, outstanding
debt, bill-paying history, and the number and types
of accounts you have as well as how long you’ve
had them.
Customer
service: Customer service is something most people
don’t consider, or appreciate, until there’s
a problem. At the very least, look for a 24-hour toll-free
telephone number when evaluating customer service.
Debit
card: This card allows you to access the money in your
checking or savings account electronically to make
purchases.
Grace period: This is the time
between the date of the credit card purchase and the
date the company starts charging you interest.
Identity
theft: Identity theft involves someone else using your
personal information to create fraudulent accounts,
to charge items to another person’s existing
accounts, or even to get a job.
Transaction
fees and other charges: Most creditors charge a fee
if you don’t make a payment on time. Other common
credit card fees include those for cash advances and
going beyond your credit limit. Some credit cards charge
a flat fee every month, whether you use your card or
not.
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