Credit Information – Part B

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.