CREDIT CARDS

Credit Cards

A credit card is a thin plastic card that can be used to buy items. A credit card might be used to buy food or restaurant meals. A credit card allows you to pay later for the items you bought. This is called charging. It means that you have paid for the items with your credit card.
You promise to pay when you sign the credit card receipt in the store. Credit cards can be issued from a store, a bank or a company. You will be billed 
monthly for the items you have charged. You can pay the entire amount owed.


Or, you can pay a part of the bill each month. Your monthly bill will tell you the minimum payment you must pay each month. Minimum payment is the smallest amount you can pay each month. You will be charged interest on the total amount you owe. Interest is the amount of money credit card companies charge for using a credit card. Interest is figured in percentages. If you pay only the minimum payment, the amount you owe will continue to grow. If you do not pay your bill on time you can be charged a late fee. If you pay late, you will pay more. If your card charges high interest, you will end up paying much more than the price of the item. Each credit card has a maximum amount you are allowed to charge. The maximum amount is called the credit limit.



A credit card, such as VISA or MasterCard, allows you to pay for sales or services by borrowing against your line of credit with the credit card company and to make monthly payments on the outstanding balance. A charge card, such as American Express requires payment in full each month of the outstanding balance charged to the account. 

What are the advantages of using a credit card?

1 They allow you to make purchases on credit without carrying around a lot of cash. 

2 They allow accurate record-keeping by consolidating purchases into a single statement. 

3 They allow convenient ordering by mail or phone. 4 They allow you to pay for large purchases in small, monthly installments. 

4 Under certain circumstances, they allow you to withhold payment for merchandise which proves defective. 

What are the disadvantages?

1 The ease of using credit cards, combined with impulsive buying, may result in over-spending. 

2 High interest rates, as well as other costs make credit cards a relatively expensive method of obtaining credit. 

3 Lost or stolen cards may result in some expense ($50.00) and inconvenience. 4 The use of multi-credit cards can get you even further into debt. 

4 Fraudulent or unauthorized charges may take months to dispute, investigate, and resolve. 

How do I get a credit card?

You must complete an application. A credit card cannot be issued unless requested. Issuers often acquire names of consumers with good credit ratings from a credit reporting agency and send the consumers "preapproved" applications. Card issuers are permitted to mail you an application or a solicitation for a credit card or to ask you by phone whether you want to receive a card and to send you a card if you say yes. An issuer will consider your employment, current assets, current debts, and credit history when you apply for a credit or charge card. If you have had a poor credit history, some companies will issue you a "Secured" credit card. The issuer requires you deposit money in an account and allows you to make credit purchases up to the amount on deposit. Consumers who wish to use such plans to rebuild their credit record should make certain that the deposits are held in a protected escrow account.

Can a merchant charge me more if I use a credit or charge card? 

YES, but if a merchant charges you more for using a credit or charge card, that fact and the additional amount must be disclosed to you before the sale is made. A merchant can also offer a discount to customers who pay cash. 

What should I do if my credit cards are lost or stolen? 

Phone the credit card company immediately, and report that your card is lost or stolen. Your monthly billing statement will list the phone number for reporting lost cards. Be sure to get the name of the person you talked to. The issuer will cancel your card so no unauthorized charges can be made on it. To create a record for the company and for your own files, write to the company after you have phoned. Include your name, address, account number, the date you believe the card was lost or stolen, and the name of the person you spoke to when you called the company. You will not be liable if you notify your issuer that your cards were lost or stolen before unauthorized charges are made. If your cards are used before you report them missing, the most you can be liable for is $50 per account.