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What is a credit card?
A credit card is a plastic card about
the size of a playing card or an ID card that lets you buy
items without needing cash, either with you or in your account
at the bank. The money for the purchase is automatically
borrowed from the credit card's issuer, and you simply pay
them back later, following the terms of their agreement with
you.
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What is credit?
The short definition of credit is: Buy
now, pay later. It's spending someone else's money with the
promise that you will pay them back.
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Can I use a credit card to get cash from an
ATM?
Many people use their credit or charge
cards to obtain cash advances. Cash advances are generally
more expensive than standard credit card charges. Most banks
charge a transaction fee up to 4% for taking a cash advance.
They also charge interest from the date the cash advance is
posted, even if you pay it back in full when your bill comes.
Finally, the interest rate is often higher on cash advances
than it is on ordinary credit card charges so check your
credit card agreement carefully.
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What are ATM cards?
ATM cards are issued by banks,
essentially to give bank customers flexibility in their
banking hours. In most areas, with an ATM card you can
withdraw money, make deposits, transfer money between accounts,
find out your balance, get a cash advance and even make loan
payments at all hours of the day or night.
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What is APR?
Annual Percentage Rate. The APR is a
measure of the cost of credit, expressed as a yearly rate. It
also must be disclosed before you become obligated on the
account and on your account statements. The card issuer also
must disclose the "periodic rate" — the rate applied to your
outstanding balance to figure the finance charge for each
billing period. Some credit card plans allow the issuer to
change your APR when interest rates or other economic
indicators — called indexes — change.
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What is Finance Charge?
Finance charge is a fee charged by
issuer when you don't have a free period, or if you pay for
purchases over time, it's important to know what method the
issuer uses to calculate your finance charge. This can make a
big difference in how much of a finance charge you'll pay —
even if the APR and your buying patterns remain relatively
constant.
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What is Grace Period?
Free Period. Also called a "grace
period," a free period lets you avoid finance charges by
paying your balance in full before the due date. Knowing
whether a card gives you a free period is especially important
if you plan to pay your account in full each month. Without a
free period, the card issuer may impose a finance charge from
the date you use your card or from the date each transaction
is posted to your account. If your card includes a free
period, the issuer must mail your bill at least 14 days before
the due date so you'll have enough time to pay.
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What happens if my credit card gets stolen?
In response to consumer complaints about
the possibility of unlimited liability, Visa and MasterCard
now cap the liability on debit cards at $50, the maximum for
unauthorized charges on your credit card bill. And some banks
don't charge anything if unauthorized withdrawals appear on
your statement. Also, a number of states have capped the
liability for unauthorized withdrawals on an ATM or debit card
at $50.
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What is Finance Charge?
Finance charge is a fee charged by
issuer when you don't have a free period, or if you pay for
purchases over time, it's important to know what method the
issuer uses to calculate your finance charge. This can make a
big difference in how much of a finance charge you'll pay —
even if the APR and your buying patterns remain relatively
constant.
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