Credit Card Frequently Asked Questions
Q: What is a credit card?
A: A credit card is a system of payment named after a small
plastic card issued from a lending institution. A credit card allows
consumers to borrow money and carry over their balances from month to
month while paying interest.
Q: How old do you have to be to apply for a
credit card?
A: Typically you have to be 18 years of age to apply for a credit card.
Q: Is there a difference between a charge
card and a credit card?
A: Yes, a charge card usually requires the borrower to pay the balance
in full each month while a credit card allows the borrower to carry over
the balance from month the month.
Q: What is the annual percentage rage
(APR)?
A: The APR is a measure of the cost of credit, expressed as a yearly
rate. It must be disclosed before you become obligated on the account
and on your account statements.
Q: What is the periodic rate?
A: The periodic rate is the rate applied to your outstanding balance to
figure the finance charge for each billing period and must be disclosed.
Q: What is a variable interest rate?
A: Sometimes credit cards can come with a variable interest rate
which is often based on the index’s performance. Rate changes can rise
or lower the finance charges of your account.
Q: What is a fixed interest rate?
A: A fixed interest rate means that as long as your account is in good
standing your rate should stay the same. You may have a different fixed
rate for cash advances than you would balance transfers or purchases.
Q: What is a grace period?
A: A grace period is a free period that lets you avoid finance charges
by paying your balance in full before the due date.