Credit Cards: Articles and Resources

Having a joint credit card can work both ways. Since the credit card account will appear on both holders' credit reports, the payment history affects both parties equally.  If the card is maintained properly, it can help improve credit. However, if one of the card holders abuses the card, racks up high dollar debt, or misses or is late on a payment, it will adversely affect both cardholder's credit rating.

In general, you are advised to keep open a minimum of three active trade lines. Ideally, you want to have a mix of different types of accounts.  The number of credit cards you have is less important that how you handle the cards you have.  Pay your bills on time and aim to keep all cards balances below 30% of the maximum credit line you've been granted.

If you want to transfer your credit card debt to a different card, you need to ensure there are no “hidden” costs. For example, the low interest rates on a balance transfer offer are usually for an introductory period only. After a limited time, the interest rate can skyrocket to an exorbitant amount. Carefully examine the length of time of the introductory rate. You also should find out if there are annual fees, service charges, and/or penalties for late charges, or limitations or restrictions that might make transferring your credit card debt to a new card counter-productive.  Make a goal to pay off the balance before the interest rate adjusts.

The average credit card debt depends on how you look at the numbers. Some Americans carry no credit debt. If you look at the total amount of credit card debt in the US and divide by the number of household estimated to have credit card debt, the average debt amount for households with any debt is almost $16,000.

When creditors provide unsecured credit to those individuals with bad credit, the credit issuers face a greater risk of default than they do with customers with a good credit history. To cover the losses they predict from high risk customers, creditors charge them  higher interest rates and fees. This is an important reason to build and maintain good credit. You will be able to borrow money, when necessary, at the lowest rates available.

An annual fee is the yearly fee credit card issuers charge for the privilege and/or services offered of the credit card.

For a credit card, APR is the effective interest rate charged the borrower for one year, when accounting for the interest that is compounded monthly.

A fee that a credit card issuer charges when you apply for a credit card.

A balance transfer is when you move a debt from one  or more credit cards to another credit card.

The fee that a credit card issuer charges a consumer that transfers a debt from another card to the issuer's card. Balance transfer fees can be a flat fee, a percentage of the balance that is transferred.

A cash advance is a loan that is taken out on your credit card. A cash advance is made by a withdrawal at an ATM or by cashing a convenience check that the creditor sends you.  Fees and high interest usually apply.

The fee that the card issuer charges you when you take a cash advance. Fees are either a percentage of the advance amount or a flat fee.

Charge-off (sometimes called "write-off") is an accounting term used by creditors when they move a delinquent account from its accounts receivable books to its bad debt ledger. This usually occurs between 180 and 240 days from the date of the last payment. Collection efforts will continue after charge-off, though the debt may pass into the hands of a third-party debt collector.

A card that is issued by a bank or financial institution that may be used to purchase goods and services on credit.

The maximum amount you can borrow on your credit card. It can be possible to exceed the credit limit. Doing so will result in over-limit fees.

An over limit fee is the fee the credit card issuers charge- if you exceed the credit limit granted. This fee can be charged each month your account balance exceeds the credit limit.

A Retail Credit Card is a credit card offer by retailers. Unlike general purpose credit cards like Visa and MasterCard, Retail credit cards can generally only be used at that particular retailer. Retail Credit Cards generally carry higher interest rates and should be used only if you frequently shop with the particular retailer.

A secured credit card requires the cardholder to deposit money into an account, generally with the card issuer. The funds in the account protect the issuer in case the cardholder defaults. Secured cards are generally used by people who have no established credit history or a bad credit history.

A teaser rate is a low interest rate, offered by credit issuers to attract new customers or encourage existing customers to use the card, that remains in effect for a short period of time. Teaser rates adjust upward once the promotional period ends. Some teaser rates can adjust to a very high rate.

Universal Default Clause is a term and condition of your credit card agreement giving credit card companies authority to increase your interest rate when payments are missed or late and the credit card company is informed you have defaulted on other payments to other creditors. The Credit Card Act of 2009 eliminated universal default.