1. Personal Finance Spring 2012

2.  Allows the user to buy goods based on the promise that they will later pay for the goods  Issuers give users access to a line of credit to purchase items

3.  Issuer (Visa) has agreement with a business (Target) to pay charges of issuer’s users(You).  You sign contract with Visa and are given a line of credit to make purchases  You makes a purchase at a Target and Visa pays Target  You pay back Visa at a later date, with possible interest charges

4.  Ease of Use  Emergencies  Build Credit History  Rewards  Fraud Protection  Record of transactions

5.  Ease of Use, Psychological: You spend more!  Interest Charges & Other Fees  Inflated Prices for all consumers

6.  Annual Fee: Yearly cost of owning a credit card. Many credit card companies offer cards with no annual fee.  Annual Percentage Rate (APR): The amount of interest charged on a yearly basis. Example: a APR of 18% means that for $100 charged, after 1 year you would need pay $118  Balance Transfer: The process of paying off another creditor’s account  Cash Advances: Money borrowed against a charge or credit card  Credit Line: Also known as credit limit, this is the maximum amount that you can charge on your credit card.

7.  Grace Period: The period within which any credit extended for purchases may be repaid without incurring a finance charge  Introductory Rate: Competitive interest rate offered to cardholders, usually for three to six months, before moving to the standard APR.  Finance Charge: The costs associated with your credit card account including such charges as interest, service or membership fees, transaction fees, etc.  Minimum Payment Due: The minimum amount you must pay, to keep your account current, if you are not paying your balance off in full (usually 2 to 3 percent of your average daily balance).

8. DEBIT CARDS -linked to your bank account -less risk of over spending CREDIT CARDS -can spend more than you have (credit limit) -fraud protection -rewards -credit rating