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Credit Information – Part B
By: Jeffrey Broobin
CCCS is a service that offers counseling about how to work out a realistic
budget and debt repayment plan and work with creditors. The goal is to ensure
that debts are paid back over time.
Interest rate
The interest rate is the fee charged form money lent. Under the Truth in Lending
Act, it must be disclosed as an APR to credit card users on the card application
form.
Joint credit
Issued to a couple based on both of their assets, incomes and credit reports. It
generally results in a higher credit limit, but makes both parties responsible
for repaying the debt.
National Foundation for Consumer Credit (NFCC)
NFCC is a non-profit organization that educates consumers about using credit
wisely. The NFCC is the parent group for Consumer Credit Counseling Service.
MasterCard
MasterCard, a product of MasterCard International, is distributed by issuing
financial institutions around the world. Card holders borrow money against a
credit line and pay it back with interest if the balance is carried over from
month to month. Its products are issued by 23,000 financial institutions in 220
countries and territories. In 1998, it had almost 700 million cards in
circulation, whose users spent $650 billion in more than 16.2 million locations.
Late payment fee
Charge to customer whose monthly payment has not been received as of the due
date or stated deadline for payment as shown on the billing statement. This fee
can be stated in terms of a flat per-transaction fee or a percentage of the
amount of the cash advance.
Over-the-limit fee
A fee charged for exceeding the credit limit on the card.
Pay-down program
Steps for paying down a credit card balance. First, stop charging on the card
and make the normal monthly minimum payment by the due date. Then, two weeks
later, send half the amount again, and two weeks later, half again. Repeat the
half payments on the two-week schedule until the balance is paid.
Penalty rate
Rate Several percentage points higher than a card's current annual percentage
rate, which goes into effect after two late payments. On some cards, a single
late payment triggers a penalty rate.
Prime rate
Prime is the interest rate a bank charges to its best or "prime" customers. Each
bank will quote a prime lending rate. Many institutions quote prime rates
established by large money center commercial banks such as Citibank or Chase
Manhattan. There is also a prime rate average listed in the Wall Street Journal
that is an average of the largest commercial banks. The rate given to consumers
on their credit cards is often based as the prime rate plus a certain percentage
that represents the lender's assessment of the risk in lending plus its profit
margin.
Revolving line of credit
This is an agreement to lend a specific amount to a borrower, and to allow that
amount to be borrowed again once it has been repaid. Most credit cards offer
revolving credit.
Titanium card
A titanium card has an even higher limit than a platinum card.
VISA
VISA cards, a product of VISA USA, are distributed by financial institutions
around the world. A VISA card holder borrows money against a credit line and
repays those funds with interest if the balance is carried over from month to
month in a revolving line of credit. Nearly 600 million cards carry one of the
Visa brands, and more than 14 million locations accept Visa cards.
Zero balance
A zero balance shows on a credit card customer's bill when the outstanding
balance has been paid and no new charges have been incurred during the billing
cycle.
Warning signs
These are the signals that credit bureaus look for in credit card customers'
credit reports. They include frequent late payments, over-the-limit fees, and
frequent balance transfers.
Liability
Liability refers to the responsibility of the borrower for charges to an
account. Generally, a cardholder agrees to be liable for any charges to his or
her account, including purchases, fees and finance charges. If the cardholder
allows someone else to make charges to his or her account (through, for example,
an additional card), the cardholder is still responsible for paying the bill.
Two people who apply for a card together may both be responsible for the entire
balance. Your liability is described in the cardholder agreement you receive
from the issuer.
About the Author:
Jeffrey Broobin is a free-lance writer on family and finance issues; his main
goal is to help people during their complicated period of life. Website: http://www.legalhelpmate.com
Email: jeffreyb@legalhelper.ws
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