Credit Card Offer Activity - Money Smart CBI

FDIC Money Smart Charge It Right

Credit Card Offer Activity ? Accessible Version

Narrator: Chris is reviewing a credit card offer that he received in the mail. He is trying to determine if this credit card would be a good choice for him. What are the advantages of this credit card offer?

Use the following credit card offer to answer the question.

CREDIT CARD OFFER Super Preferred Credit Card 1% APR!!! 25-Day Grace Period No Annual Fee

TRUTH IN LENDING DISCLOSURE STATEMENT

Interest Rates and Interest Charges

Annual Percentage Rate (APR) for Purchases

1.00% introductory APR for six months. After that, your APR will be 18.99%. This APR will vary

with the market based on the Prime Rate.

APR for Balance Transfers

15.99% This APR will vary with the market based on the Prime Rate.

APR for Cash Advances

21.99% This APR will vary with the market based on the Prime Rate.

Penalty APR and When it Applies

28.99% This APR may be applied to your account if you:

Make a late payment; Go over your credit limit; or Make a payment that is returned.

Paying Interest

Minimum Interest Charge For Credit Card Tips from the

How Long Will the Penalty APR Apply: If your APRs are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum payments when due and do not exceed your credit limit during that time period.

Your due date is at least 25 days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date each month. We will begin charging interest on cash advances and balance transfers on the transaction date.

If you are charged interest, the charge will be no less than $1.50.

To learn more about factors to consider when applying for or

Page 1 of 3

FDIC Money Smart Charge It Right

Federal Reserve Board

using a credit card, visit the website of the Federal Reserve Board at .

Fees

Set-up and Maintenance Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you begin using your card and will reduce the amount of credit you initially have available.

Annual Fee

$0

Account Set-up Fee $20 (one-time fee)

Participation Fee

$12 annually ($1 per month)

Additional Card Fee $5 annually (if applicable)

Transaction Fees Balance Transfer

Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100).

Cash Advance

Either $5 or 3% of the amount of each cash advance, whichever is greater.

Foreign Transaction

Penalty Fees Late Payment

2% of each transaction in U.S. dollars. Up to $35.

Over-the-Credit Limit Up to $35.

Returned Payment

Up to $35.

How We Will Calculate Your Balance: We use a method called "average daily balance (including new purchases)." See your account agreement for more details.

Loss of Introductory APR: We may end your introductory APR and apply the Penalty APR if you make a late payment.

Billing Rights: Information on your rights to dispute transactions and how to exercise those rights is provided in your account agreement.

What are the advantages for this credit card offer? Select an answer from the following choices.

a. The APR is only 1%. b. There's a 25-day grace period. c. There's no annual fee.

Page 2 of 3

FDIC Money Smart Charge It Right

If you select a. The APR is only 1%; you will receive the following feedback. Narrator: It's true that the APR is only 1%, but notice that it increases to 18.99 percent after 6 months. Also, if Chris makes one late payment, the APR could increase to 28.99 percent for future transactions. 18.99 percent is a high APR and 28.99 percent is extremely high. This is not an advantage for Chris. Try selecting a different answer. If you select b. There's a 25-day grace period; you will receive the following feedback. Narrator: It's true that this card has a 25-day grace period, but only if the previous amount is paid in full by the due date. If Chris keeps a balance on his credit card, he will incur finance charges. Try selecting a different answer. If you select c. There's no annual fee; you will receive the following feedback. Narrator: That's right! No annual fee is the only clear advantage of this credit card offer. There are other things that look like advantages until you read the fine print. For example, the 1 percent APR increases to 18.99 percent after six months. And the 25-day grace period only applies if you pay your balance in full each month. This is why it is important to read the Truth in Lending Disclosure Statement carefully before agreeing to any offers. The activity ends.

Page 3 of 3

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download