Online Credit Card Information...

What is APR?
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. Because the rate change is linked to the index's performance, these plans are called "variable rate" programs. Rate changes raise or lower the finance charge on your account. If you're considering a variable rate card, the issuer must also provide various information that discloses to you:

       When the rate may change
       How the rate is determined
       Which index is used.
       What additional amount, the "margin," is added to determine your new rate. 
       About any limitations on how much and how often your rate may change.

What is Grace Period?
A free period where no finance charges accrue, also known as a "grace period." A grace period lets you avoid finance charges by paying your balance in full before the due date. Knowing whether a credit card gives you a grace period is especially important if you plan to pay your account in full each month. Without a grace period, the card issuer may impose a finance charge from the date you use your credit card or from the date each transaction is posted to your account. If your credit card includes a grace period, the issuer should mail your bill at least 14 days before the due date so you'll have enough time to pay.

What is Finance Charge?
Finance charge is a fee charged (interest) by the issuer of a credit card beyond the grace period. It is charged if you choose to pay for purchases or cash advances over time. It is 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 over time. Finance charges are regulated by state and Federal law. The lower the finance charge, the less you will ultimately pay for a purchase over time.

How is Finance Charge calculated?
Examples of balance computation methods include the following:

Average Daily Balance
This is the most common calculation method. It credits your account from the day payment is received by the issuer. To figure the balance due, the issuer totals the beginning balance for each day in the billing period and subtracts any credits made to your account that day. While new purchases may or may not be added to the balance, depending on your plan, cash advances typically are included. The resulting daily balances are added for the billing cycle. The total is then divided by the number of days in the billing period to get the "average daily balance."

Adjusted Balance
This is usually the most advantageous method for card holders. Your balance is determined by subtracting payments or credits received during the current billing period from the balance at the end of the previous billing period. Purchases made during the billing period are not included. This method gives you until the end of the billing cycle to pay a portion of your balance to avoid the interest charges on that amount. Some creditors exclude prior, unpaid finance charges from the previous balance.

Previous Balance.
This is the amount you owed at the end of the previous billing period. Payments, credits and new purchases during the current billing period are not included. Some creditors also exclude unpaid finance charges.

Two-cycle Balances
Issuers sometimes use various methods to calculate your balance that make use of your last two month’s account activity. Read your agreement carefully to find out if your issuer uses this approach and, if so, what specific two-cycle method is used.

Are there any other fees?
Annual Fees.
Most issuers charge annual membership or participation fees. These fees often range from $25 to $50 up to $100. Gold or Platinum credit cards often charge up to $75 and sometimes up to several hundred dollars.
Some cards charge monthly fees, some charge a monthly fee whether or not you use the card. Read your agreement before you accept a credit card!
Transaction Fees and Other Charges.
A card may include other costs. Some issuers charge a fee if you use the card to get a cash advance, make a late payment, or exceed your credit limit.

What is a Secured credit card? 
A Secured credit card means that a security deposit account is needed to secure your credit card. The security deposit amount will equal your credit limit. There is nothing on the card that indicates it is a secured credit card, it can be used exactly the same as an unsecured credit card. A secured credit card offers all the convenience of an unsecured major credit card. Using the credit card does not access your deposit, thus the money remains untouched in the security deposit as long as your secured credit card account is open. A secured credit card can be one of the best tools for starting or rebuilding a favorable credit history.

What values to look for?
Credit terms vary among issuers. When shopping for a credit card, think about how you plan to use it. If you expect to pay your bills in full each month, the annual fee and other charges may be more important than the periodic rate and the APR, and if there is a grace period for purchases. If you use the cash advance feature many credit cards do not permit a grace period for cash advances even if they have a grace period for purchases. It may still be wise to consider the APR and balance computation method. Also, if you plan to pay for purchases over time, the APR and the balance computation method are definitely major considerations.

What to do when I lose my card?
If you lose your credit or charge cards or if you realize they've been lost or stolen, immediately call the issuer. Many companies have toll-free numbers and 24-hour service to deal with such emergencies. If you report the loss before the card is used, you can’t be held responsible for any unauthorized charges. If a thief uses your card before you report it missing, the most you could usually owe for unauthorized charges is $50.
If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase in question. 

What rights do I have?
Federal law protects your use of credit cards.
Prompt Credit for Payment.
An issuer must credit your account the day payment is received. The exceptions are if the payment is not made according to the creditor’s requirements, or the delay in crediting your account won’t result in a charge.
Refunds of Credit Balances. When you make a return or pay more than the total balance at present, you can keep the credit on your account or write your issuer for a refund — if it’s more than a dollar. If a credit stays on your account for more than six months, the issuer usually make a good faith effort to send you a refund.

Errors on Your Bill.
Issuers must follow rules for promptly correcting billing errors. You should get a statement outlining these rules when you open an account and once a year. In fact, many issuers include a summary of these rights on the back of your bill.
If you find a mistake on your bill, you can dispute the charge and withhold payment on that amount while the charge is being investigated. The error might be a charge for the wrong amount, for something you didn’t accept, or for an item that wasn’t delivered as agreed. Of course, you still have to pay any part of the bill that’s not in dispute, including finance and other charges.

If you decide to dispute a charge:
Write to the creditor at the address indicated on your statement for "billing inquiries." Include your name, address, account number, and a description of the error. 
Send your letter soon. I suggest sending it return receipt to protect your rights! It should reach the creditor within 30 days after the first bill containing the error was mailed to you. 
The creditor should acknowledge your complaint in writing within 30 days of receipt, unless the problem has been resolved. At the latest, the dispute must be resolved within two billing cycles, but not more than 90 days.

Anything else I should know?

     You can negotiate with an existing credit card issuer for a lower rate. Call customer service and ask!

     Shop around for the plan that best fits your needs; Low annual fee if you pay in full, low interest rate if you           carry a balance. 

     Make sure you understand a card’s terms before you accept the credit card. 

     Pay bills promptly to keep finance and other charges to a minimum. 

     If you pay late your APR can be raised!

     Hold on to receipts to reconcile charges when your bill arrives. 

     Protect your cards and account numbers to prevent unauthorized use.

     Draw a line through blank spaces on charge slips so the amount can’t be changed.

     Tear up carbons. 

     Keep a record, in a safe place separate from your cards, of your account numbers, expiration dates, and           the phone numbers of each issuer to report a loss quickly. 

     Carry only the cards you think you’ll use.

                                                  

How Do Credit Cards Work?
How do credit cards work exactly? Well, let's begin with the basics: technology makes credit cards work. A thin plastic card, usually 3-1/8 inches by 2-1/8 inches in size, contains identification information such as a signature or picture, and it authorizes the person named on that credit card to charge purchases or services to his or her account -- charges for which that person will be billed periodically.
Today, what really makes the credit card work harder than ever is the fact that the information on the card is read by automated teller machines (ATMs), store readers, and bank and Internet computers.

How Long Have Credit Cards Been Used?
We have had credit cards working for us in the U.S. since the 1920s, when individual companies, such as hotel chains and oil companies, began issuing them to customers for purchases made at their businesses. This use increased significantly after World War II.

The first universal credit card worked a little differently than those earlier ones -- it could be used at a variety of stores and businesses. It was introduced by Diners' Club, Inc., in 1950. With this system, the credit card company charged card holders an annual fee and billed them on a monthly or yearly basis. Another major universal card -- the one with the famous TV commercial ("Don't leave home without it!") -- was established in 1958 by the American Express Co. Later came the bank credit card works, or system. Under this plan, the bank credits the account of the merchant as sales slips are received (this meant merchants were paid quickly --something they loved) and assembles charges to be billed to the credit card holder at the end of the billing period. The credit card works for the issuer when the card holder pays the bank either the entire balance or in monthly installments with interest (sometimes called carrying charges). The first national bank plan was BankAmericard, which was started on a statewide basis in 1959 by the Bank of America in California. This system was licensed in other states starting in 1966 and renamed Visa in 1976.

Most other major bank credit cards work in a similar way. Those early credit cards were soon followed by MasterCard, formerly Master Charge. In order to offer expanded services, such as meals and lodging, many smaller banks that earlier offered credit cards on a local or regional basis formed relationships with large national or international banks.

What Do the Numbers on My Credit Card Mean?
Credit cards work thanks to computers and special numbering systems. Although phone, gas and department stores have their own numbering systems, ANSI Standard X4.13-1983 is the system used by most national credit card systems. Here are what some of the numbers mean and how they make credit cards work so efficiently:

   The first digit in your credit card number signifies the         system -- 3=travel/entertainment cards  4=Visa,         5=MasterCard and 6=Discover Card.

   The structure of the credit card number varies by system.         For example, American Express card numbers start with         37; Carte Blanche and Diners Club with 38.

    American Express: Digits 3-4 are type and currency, digits         5-11 are the account number, digits 12-14 are the card         number within the account, and digit 15 is a check digit.

    Visa: Digits 2-6 are the bank number, digits 7-12 or 7-15         are the account number, and digit 13 or 16 is a check digit.

    MasterCard: digits 2-3, 2-4, 2-5 or 2-6 are the bank number         (depending on whether digit 2 is a 1, 2, 3 or other).

    The digits after the bank number up through digit 15 are the          account number, and digit 16 is a check digit.

    So now you know a little bit more about how credit cards work. To learn more, check our list of other articles. To make one of our top-rated credit cards work for you, click to see our credit card selector.

    Credit Reports: What Information Providers Need to Know The Fair Credit Reporting Act (FCRA) is designed to protect the privacy of credit report information and to guarantee that information supplied by consumer reporting agencies (CRAs) is as accurate as possible. If you provide information to a CRA, such as a credit bureau, be aware that amendments to the law spell out new legal obligations. These amendments were effective September 30, 1997.

Does the FCRA Affect Me?
If you report information about consumers to a CRA, you are considered a "furnisher" of information under the FCRA. CRAs include many types of databases -- credit bureaus, tenant screening companies, check verification services, and medical information services -- that collect information to help businesses evaluate consumers. If you provide information to a CRA regularly, the FCRA requires that the CRA send you a notice of your responsibilities.
What Are My Responsibilities?
The responsibilities of information providers are found in Section 623 of the FCRA, 15 U.S.C. §1681s-2, and are explained here. Items 2 and 5 apply only to furnishers who provide information to CRAs "regularly and in the ordinary course of their business." All information providers must comply with the other responsibilities.
1. General Prohibition on Reporting Inaccurate Information - Section 623(a)(1)(A) and Section 623(a)(1)(C).
You may not furnish information that you know -- or consciously avoid knowing -- is inaccurate. If you "clearly and conspicuously" provide consumers with an address for dispute notices, you are exempt from this obligation but subject to the duties discussed in Item 3.
What does "clear and conspicuous" mean? Reasonably easy to read and understand. For example, a notice buried in a mailing is not clear or conspicuous.
2. Correcting and Updating Information -- Section 623(a)(2).
If you discover you've supplied one or more CRAs with incomplete or inaccurate information, you must correct it, resubmit to each CRA, and report only the correct information in the future.
3. Responsibilities After Notice of a Consumer Dispute from a Consumer --Sections 623(a)(1)(B) and 623(a)(3).
If a consumer writes to the address you specify for disputes to challenge the accuracy of any information you furnished, and if the information is, in fact, inaccurate, you must report only the correct information to CRAs in the future. If you are a regular furnisher, you also will have to satisfy the duties in Item 2.
Once a consumer has given notice that he or she disputes information, you may not give that information to any CRA without also telling the CRA that the information is in dispute.
4. Responsibilities After Receiving Notice from a Consumer Reporting Agency -- Section 623(b).
If a CRA notifies you that a consumer disputes information you provided:
You must investigate the dispute and review all relevant information provided by the CRA about the dispute.
You must report your findings to the CRA.
If your investigation shows the information to be incomplete or inaccurate, you must provide corrected information to all national CRAs that received the information.
You should complete these steps within the time period that the FCRA sets out for the CRA to resolve the dispute -- normally 30 days after receipt of a dispute notice from the consumer. If the consumer provides additional relevant information during the 30-day period, the CRA has 15 days more. The CRA must give you all relevant information that it gets within five business days of receipt, and must promptly give you additional relevant information provided from the consumer. If you do not investigate and respond within the specified time periods, the CRA must delete the disputed information from its files.
5. Reporting Voluntary Account Closings -- Section 623(a)(4).
You must notify CRAs when consumers voluntarily close credit accounts. This is important because some information users may interpret a closed account as an indicator of bad credit unless it is clearly disclosed that the consumer -- not the creditor -- closed the account.
6. Reporting Delinquencies -- Section 623(a)(5).
If you report information about a delinquent account that's placed for collection, charged to profit or loss, or subject to any similar action, you must, within 90 days after you report the information, notify the CRA of the month and the year of the commencement of the delinquency that immediately preceded your action. This will ensure that CRAs use the correct date when computing how long derogatory information can be kept in a consumer's file.
How do you report accounts that you have charged off or placed for collection? For example:
A consumer becomes delinquent on March 15, 1998. The creditor places the account for collection on October 1, 1998.
In this case, the delinquency began on March 15, 1998. The date that the creditor places the account for collection has no significance for calculating how long the account can stay on the consumer's credit report. In this case, the date that must be reported to CRAs within 90 days after you first report the collection action is "March 1998."
A consumer falls behind on monthly payments in January 1998, brings the account current in June 1998, pays on time and in full every month through October 1998, and thereafter makes no payments. The creditor charges off the account in December 1999.
In this case, the most recent delinquency began when the consumer failed to make the payment due in November 1998. The earlier delinquency is irrelevant. The creditor must report the November 1998 date within 90 days of reporting the charge-off. For example, if the creditor charges off the account in December 1999, and reports this charge-off on December 31, 1999, the creditor must provide the month and year of the delinquency (i.e., "November 1998") within 90 days of December 31, 1999.
A consumer's account becomes delinquent on December 15, 1997. The account is first placed for collection on April 1, 1998. Collection is not successful. The merchant places the account with a second collection agency on June 1, 2003.
The date of the delinquency for reporting purposes is "December 1997." Repeatedly placing an account for collection does not change the date that the delinquency began.
A consumer's credit account becomes delinquent on April 15, 1998. The consumer makes partial payments for the next five months but never brings the account current. The merchant places the account for collection in May of 1999.
Since the account was never brought current during the period that partial payments were made, the delinquency that immediately preceded the collection commenced in April 1998 when the consumer first became delinquent.
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.