Get Smart About Credit Comparing Credit Cards

Terms Defined  Expense  Interest  Minimum payment  Annual fee  APR  Grace Period  Balance  Finance Charge  Convenience Checks

Case Study #1 A student has been offered a card through her college and decides to accept it in order to begin establishing credit. She plans to use the card for clothes, CDs and other small items and has decided never to charge more than $200 in any month. She will pay the monthly bill in full using income from her part-time job. She may occasionally take out a cash advance between paychecks.

Comparing Credit and Debit Sheet for Case Studies Card Type GeneralCash AdvanceCharges Annual FeeMinimum PaymentIncentivesAdvance FeeInterest Rate Credit Limit CREDIT #1$20 2% of average daily balance or minimum of $15 $5 gasoline credit for every $100 charged 4% of each amount advanced; minimum of $519.80%12.90%$3,000 CREDIT #2$40 2.5% of average daily balance or minimum of $10 purchase breakage insurance 3% of dollar amount; no maximum18.90%16%$6,000 CREDIT #3None 1/30 of balance or minimum of $10None 2% of dollar amount; minimum of $5 9% with convenience checks15%$500 CREDIT #4$30 2% of average daily balance or minimum of $20None 4% of each amount advanced; minimum of $518%10.90%$1,000 CREDIT #5$35 1/33 of balance or minimum of $15 Frequent Flier Miles-- 1 mile per $1 charged 4% of each amount advanced; minimum of $518%12.90%$5,000 CREDIT #6$50 1/25 of balance or minimum of $30 Credit toward grocery purchases$10 fixed fee12%18%$2,500 DEBIT #7Nonen/a Accepted as cash at most merchantsn/a None Available Account Balance

Case Study #2 A recent graduate has made a budget and wants to stick to it. She’ll use as little credit as possible, especially for everyday purchases. Her motto is “I pay as I go.” She has lots of day- to-day expenses—going to the movies, shopping for fresh groceries and buying new books or magazines to read over the weekend, but is reluctant to carry more than $50 in cash. She also treats herself once a month to a new accessory. In addition to being careful with her money, she’s careful with her personal information. She dislikes writing checks for her purchases since that requires handing over photo identification and giving her address and phone number.

Comparing Credit and Debit Sheet for Case Studies Card Type GeneralCash AdvanceCharges Annual FeeMinimum PaymentIncentivesAdvance FeeInterest Rate Credit Limit CREDIT #1$20 2% of average daily balance or minimum of $15 $5 gasoline credit for every $100 charged 4% of each amount advanced; minimum of $519.80%12.90%$3,000 CREDIT #2$40 2.5% of average daily balance or minimum of $10 purchase breakage insurance 3% of dollar amount; no maximum18.90%16%$6,000 CREDIT #3None 1/30 of balance or minimum of $10None 2% of dollar amount; minimum of $5 9% with convenience checks15%$500 CREDIT #4$30 2% of average daily balance or minimum of $20None 4% of each amount advanced; minimum of $518%10.90%$1,000 CREDIT #5$35 1/33 of balance or minimum of $15 Frequent Flier Miles-- 1 mile per $1 charged 4% of each amount advanced; minimum of $518%12.90%$5,000 CREDIT #6$50 1/25 of balance or minimum of $30 Credit toward grocery purchases$10 fixed fee12%18%$2,500 DEBIT #7Nonen/a Accepted as cash at most merchantsn/a None Available Account Balance

Case Study #3 A 22-year old has just taken his first job and moved into his first apartment. He has a lot of used furniture from family and friends but wants to use a credit card to purchase household items online. He also plans to purchase tickets for sporting events as well as for general entertainment. Rather than waiting to purchase things as he can afford them, he has decided to buy everything he wants now and pay it off over time.

Comparing Credit and Debit Sheet for Case Studies Card Type GeneralCash AdvanceCharges Annual FeeMinimum PaymentIncentivesAdvance FeeInterest Rate Credit Limit CREDIT #1$20 2% of average daily balance or minimum of $15 $5 gasoline credit for every $100 charged 4% of each amount advanced; minimum of $519.80%12.90%$3,000 CREDIT #2$40 2.5% of average daily balance or minimum of $10 purchase breakage insurance 3% of dollar amount; no maximum18.90%16%$6,000 CREDIT #3None 1/30 of balance or minimum of $10None 2% of dollar amount; minimum of $5 9% with convenience checks15%$500 CREDIT #4$30 2% of average daily balance or minimum of $20None 4% of each amount advanced; minimum of $518%10.90%$1,000 CREDIT #5$35 1/33 of balance or minimum of $15 Frequent Flier Miles-- 1 mile per $1 charged 4% of each amount advanced; minimum of $518%12.90%$5,000 CREDIT #6$50 1/25 of balance or minimum of $30 Credit toward grocery purchases$10 fixed fee12%18%$2,500 DEBIT #7Nonen/a Accepted as cash at most merchantsn/a None Available Account Balance

Case Study #4 A young professional wants to use a credit card for business travel as well as personal expenses. She anticipates having about $2,000 per month in business tickets to visit her fiancé in another state. She expects to pay her bill in full most months but may carry a balance for two or three months a year.

Comparing Credit and Debit Sheet for Case Studies Card Type GeneralCash AdvanceCharges Annual FeeMinimum PaymentIncentivesAdvance FeeInterest Rate Credit Limit CREDIT #1$20 2% of average daily balance or minimum of $15 $5 gasoline credit for every $100 charged 4% of each amount advanced; minimum of $519.80%12.90%$3,000 CREDIT #2$40 2.5% of average daily balance or minimum of $10 purchase breakage insurance 3% of dollar amount; no maximum18.90%16%$6,000 CREDIT #3None 1/30 of balance or minimum of $10None 2% of dollar amount; minimum of $5 9% with convenience checks15%$500 CREDIT #4$30 2% of average daily balance or minimum of $20None 4% of each amount advanced; minimum of $518%10.90%$1,000 CREDIT #5$35 1/33 of balance or minimum of $15 Frequent Flier Miles-- 1 mile per $1 charged 4% of each amount advanced; minimum of $518%12.90%$5,000 CREDIT #6$50 1/25 of balance or minimum of $30 Credit toward grocery purchases$10 fixed fee12%18%$2,500 DEBIT #7Nonen/a Accepted as cash at most merchantsn/a None Available Account Balance

Case Study #5 A freshman student has an on-campus job that pays about $400 per month. He needs to buy books, clothes and other small items from time to time. His paycheck is direct deposited into his checking account every two weeks. He has been walking into town each week to make a cash withdrawal of $75 to cover his expenses and sometimes needs to make extra trips to the bank if he runs out of cash or needs more money for more expensive purchases. He feels uncomfortable carrying around this much cash. Since his dorm room is furnished and he has a computer already, he has no plans to make any large purchases.

Comparing Credit and Debit Sheet for Case Studies Card Type GeneralCash AdvanceCharges Annual FeeMinimum PaymentIncentivesAdvance FeeInterest Rate Credit Limit CREDIT #1$20 2% of average daily balance or minimum of $15 $5 gasoline credit for every $100 charged 4% of each amount advanced; minimum of $519.80%12.90%$3,000 CREDIT #2$40 2.5% of average daily balance or minimum of $10 purchase breakage insurance 3% of dollar amount; no maximum18.90%16%$6,000 CREDIT #3None 1/30 of balance or minimum of $10None 2% of dollar amount; minimum of $5 9% with convenience checks15%$500 CREDIT #4$30 2% of average daily balance or minimum of $20None 4% of each amount advanced; minimum of $518%10.90%$1,000 CREDIT #5$35 1/33 of balance or minimum of $15 Frequent Flier Miles-- 1 mile per $1 charged 4% of each amount advanced; minimum of $518%12.90%$5,000 CREDIT #6$50 1/25 of balance or minimum of $30 Credit toward grocery purchases$10 fixed fee12%18%$2,500 DEBIT #7Nonen/a Accepted as cash at most merchantsn/a None Available Account Balance

Case Study #6 A newly married couple wants to get a credit card. They will use it mostly for everyday expenses such as groceries, gas for the car and so forth. They each drive to work, so their monthly gas bills are fairly high. In the next few months, they plan to make a major furniture purchase to furnish the living and dining rooms in their new apartment. They expect to complete payments on the furniture. They don’t anticipate needing cash advances.

Comparing Credit and Debit Sheet for Case Studies Card Type GeneralCash AdvanceCharges Annual FeeMinimum PaymentIncentivesAdvance FeeInterest Rate Credit Limit CREDIT #1$20 2% of average daily balance or minimum of $15 $5 gasoline credit for every $100 charged 4% of each amount advanced; minimum of $519.80%12.90%$3,000 CREDIT #2$40 2.5% of average daily balance or minimum of $10 purchase breakage insurance 3% of dollar amount; no maximum18.90%16%$6,000 CREDIT #3None 1/30 of balance or minimum of $10None 2% of dollar amount; minimum of $5 9% with convenience checks15%$500 CREDIT #4$30 2% of average daily balance or minimum of $20None 4% of each amount advanced; minimum of $518%10.90%$1,000 CREDIT #5$35 1/33 of balance or minimum of $15 Frequent Flier Miles-- 1 mile per $1 charged 4% of each amount advanced; minimum of $518%12.90%$5,000 CREDIT #6$50 1/25 of balance or minimum of $30 Credit toward grocery purchases$10 fixed fee12%18%$2,500 DEBIT #7Nonen/a Accepted as cash at most merchantsn/a None Available Account Balance

Choices Meet your needs Be choosy Do research

Consider this… Annual fee Credit limit Flexibility On-line vs. off-line Security

Consider this… Transaction fee Responsibility

Questions to ask your bank: What is the annual percentage rate? Is the interest rate fixed or variable? Is there an interest-free grace period? Is there an annual fee? Does the bank charge other fees for, say, going over my credit limit or making a late payment? What is the interest rate for cash advances? Does the card offer perks?