the ultimate guide to credit cards - kard
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CREDIT CARDSU L T I M A T E G U I D E T O
What you need to know
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TOTAL USCREDITCARD DEBT:
$733TRILLION
Yet 2/3 of Americans don't know howcredit cards work.The cost of living in this country has rapidly outpaced
the growth of our paychecks for the past 12 years. The
increasing number of credit card transactions means one
thing: Americans are spending money they don't have.
A credit card is a tool. Without proper understanding, it
can be an expensive mistake. Its worth it to learn more.
For those who want to be informed, know that you are
not alone.
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C R E D I T C A R D S C O N T R I B U T ET O Y O U R C R E D I T S C O R E .
A credit card lets you borrow money in exchange for a
percentage of interest on any outstanding debt at the end
of each billing cycle. The amount you are allowed to
spend is called your credit line.
WHAT IS ACREDIT CARD?
This three digit number determines how likely you are
to pay your bills...and pay them on time. It will affect your
interest rates and ability to get a loan.
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IN FULLYou can pay in full by not
carrying a balance forward to
the next month. Make sure to
wait until the billing cycle
ends so it gets reported to a
credit agency.
Sometimes you need to make
a big purchase or have an
emergency. Credit cards let
you carry a balance from
month to month. Beware of
compounding interest.
OVER TIMEP A Y M E N T S
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Your Annual Percentage Rate or APR tells you your interest rate. This is determined by your credit score.
Credit card interest is compounded. This means that any interest accrued beforehand will be added to the
amount you originally borrowed so that your debt grows exponentially. Most credit card interest is
compounded daily.
COMPOUNDINGINTEREST
C R E D I T C A R D C O M P A N I E S M A K E M O N E Y O F F
Interest is what you pay for borrowing money.
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FEESThey add up.
Annual fees are the costs of simply owning a credit card.
Not all cards have one.
Late fees are charged when you fail to pay the minimum
payment before the due date.
Balance transfer fees are charged when you move your
balance from one card to another.
Cash advance fees are charges you have to pay for
borrowing cash against your credit card.
Foreign transaction fees are extra charges when the card
is used outside the country it was issued in.
Over-the-limit fees occur when your balance exceeds
your credit limit.
C R E D I T C A R D C O M P A N I E S M A K E M O N E Y O F F
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GRACE PERIODU N D E R S T A N D I N G Y O U R
The Grace Period is the time between the statement’s closing date and the statement’s due date.
You can avoid all interest charges by paying your statement balance in full during this time.
Statement closes Statement due
Grace Period
June July
No interest if paid in full!
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CREDITCARDS THATBUILD ORREBUILDCREDIT
These cards are help you build creditfor the first time or improve yourcredit standing.
Student credit cards are typically meant for college
students who have little to no credit history and are
easier to qualify for.
Secured credit cards generally require a security deposit
as collateral. Once you upgrade to an unsecured card, or
close the account in good standing, you get the deposit
back.
Look for:
- Automatic credit limit increases.
- Earning interest on your security deposit.
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CREDITCARDS THATSAVE ONINTEREST
These are known as unsecured,meaning you don’t have to put downa security deposit. This type of cardis useful if you don’t always pay offyour balance.
Balance transfer cards let you transfer a balance from a
high interest credit card to one with a lower interest rate.
Low interest credit cards offer either a low introductory
APR that might jump to a higher rate, or a single low
fixed-rate APR.
Look for:
- Personal debt payoff planner tool
- No late fees or penalty APR
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CREDITCARDS THAT OFFERREWARDS
This might be a good fit for you if youpay off your balance every month.These usually have higher APR’s but give you points, miles, or cash backon every dollar you spend.
Cashback credit cards earn cash for making purchases.
While the typical return is 1% of total spending, some
offer higher cash back percentages for consistent use,
select categories, or select merchants.
General rewards points cards earn points instead of cash
that can be used in a reward program. They offer a variety
of items to trade in points for including plane tickets,
hotel stays, electronics, gift cards and more.
Hotel or travel points cards also earn points but are
specific to certain hotels and airlines. You can exchange
those points for hotel stays and plane tickets. These cards
are best for frequent travelers.
Look for:
- Lower required spending.
- No expiration date on rewards.
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4 EASY STEPS1. Check your credit score. This will ultimately decide what
credit card you are eligible for. Get free reports at
AnnualCreditReport.com, a federally authorized site.
2. Determine which kind of credit card you need. Look above.
3 . Ask the right questions.
Does it meet my spending needs?
Is it the right type of card for me?
Is the card widely accepted?
What features, services and security options are available?
4. Apply to the credit card with the highest overall value.
the card that is best for you.
PICK
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SIGNUPBONUSES*
Some credit cards offer cash
bonuses for spending a
certain amount before a
certain date.
Others reduce or eliminate
the APR or other fees for the
first few months.
PROMOTIONALFINANCING*
S P E C I A L O F F E R S
* A L W A Y S R E A D T H E T E R M SA N D C O N D I T I O N S
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CARD-LINKED OFFERSC R E D I T C A R D C O M P A N I E S A R EM O V I N G A W A Y F R O M C A T E G O R YR E W A R D S T O M E R C H A N TS P E C I F I C R E W A R D S .
2 X O ND I N I N G
C A R D - L I N K E D O F F E R S M U S T B EM A N U A L L Y A C T I V A T E D O N T H E
R E W A R D S S E C T I O N O F Y O U R C R E D I T C A R D A C C O U N T .
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THANK YOUW E H O P E Y O U J O I N U S
T H I S G U I D E I S B R O U G H T T O Y O U B Y
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REFERENCEShttp://www.dartmouth.edu/~alusardi/Papers/Lusardi_Tufano.pdf
http://www.comparecards.com/pdf/ebook/Ultimate_Guide_eBook_v1.0.pdf
https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/
https://www.creditkarma.com/faq/what-is-a-good-credit-score
https://www.discover.com/credit-cards/resources/credit-cards-101/15-common-credit-card-questions
https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/
https://www.citicards.com/cards/wv/html/cm/student/credit-card-abcs/how-credit-cards-work/finance-
charges-and-fees.html
http://www.creditcards.com/credit-card-news/help/types-of-credit-cards-6000.php
https://www.nerdwallet.com/blog/credit-cards/how-to-pick-the-best-credit-card-for-you-4-easy-steps/
https://www.getkard.com/blog/2016/04/12/card-linked-offers/
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