credit card terms pt 2: 30% rule, fees & fraud

conquering credit & credit cards

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what's in this lesson?

Continuing on from the previous lesson, let’s define more credit card terms so you know how to build credit and you’re not caught off guard by fees and other unfortunate credit card things.

credit card terms pt 2: 30% rule, fees & fraud

conquering credit & credit cards

Continuing on from the previous lesson, let’s define more credit card terms so you know how to build credit and you’re not caught off guard by fees and other unfortunate credit card things.

what's in this lesson?

Continuing on from the previous lesson, let’s define more credit card terms so you know how to build credit and you’re not caught off guard by fees and other unfortunate credit card things.

overview

Did you miss part 1 of our key terms lessons? Check it out here! Without further adieu, continuing on with the knowledge:

 

  • Foreign transaction fee: Some cards assess fees for purchases made in other countries. So, by using your card outside the US, the dollars can pile up. Fees range, but many are in the 1-3% range. So, if you spend $100 on your next trip to the club in Italy, it could actually be $103. Pay close attention!
  • Late fee: Credit card late fees are assessed for not paying your balance on time. If your bill is due on October 26th and you don’t pay it until November 1st, you could be assessed a flat fee for late payment.
  • Credit utilization ratio: Credit utilization ratio is how much of your available credit you’re using as a percentage of the whole. Available credit can be calculated on a per card basis and a combined basis. On a per card basis, that is just your credit limit. On a combined basis, it is everything you have outstanding.
      • Example: So, say you have 2 credit cards – one with a $1,000 limit and one with a $500 limit. Your combined available credit is $1,500. Generally, you want to follow the 30% rule – keep your utilization ratio below 30% each month. For example, if your available credit is $1,500, you want to spend $450 or less. Credit bureaus view going above 30% as bad and will lower your credit score, but if you follow these rules, over time your limit will go up and you’ll be able to spend more.
  • Credit card fraud: Ever get hacked? It’s not fun. Credit card fraud is basically the hacking of your credit card. If someone gains access to, and hacks, your card, that would not be good – but it happens. Thankfully, many credit card companies are really good at spotting fraud and will alert you to when a transaction might seem fraudulent. But, they don’t always catch it, so that’s why it’s important to regularly check your card statements to verify that all charges were made by you.
      • NOTE: if fraudulent charges are made and the credit card company agrees they were fraud, you won’t have to pay for them.

While there’s definitely a lot remember, the odds are you won’t always need to know all of these at a given time. But, it’s good to have your knowledge built up. We wanted to do our best to make sure you don’t learn them the hard way.

Source(s): Credit Karma, Experian

overview

Did you miss part 1 of our key terms lessons? Check it out here! Without further adieu, continuing on with the knowledge:

 

  • Foreign transaction fee: Some cards assess fees for purchases made in other countries. So, by using your card outside the US, the dollars can pile up. Fees range, but many are in the 1-3% range. So, if you spend $100 on your next trip to the club in Italy, it could actually be $103. Pay close attention!
  • Late fee: Credit card late fees are assessed for not paying your balance on time. If your bill is due on October 26th and you don’t pay it until November 1st, you could be assessed a flat fee for late payment.
  • Credit utilization ratio: Credit utilization ratio is how much of your available credit you’re using as a percentage of the whole. Available credit can be calculated on a per card basis and a combined basis. On a per card basis, that is just your credit limit. On a combined basis, it is everything you have outstanding.
      • Example: So, say you have 2 credit cards – one with a $1,000 limit and one with a $500 limit. Your combined available credit is $1,500. Generally, you want to follow the 30% rule – keep your utilization ratio below 30% each month. For example, if your available credit is $1,500, you want to spend $450 or less. Credit bureaus view going above 30% as bad and will lower your credit score, but if you follow these rules, over time your limit will go up and you’ll be able to spend more.
  • Credit card fraud: Ever get hacked? It’s not fun. Credit card fraud is basically the hacking of your credit card. If someone gains access to, and hacks, your card, that would not be good – but it happens. Thankfully, many credit card companies are really good at spotting fraud and will alert you to when a transaction might seem fraudulent. But, they don’t always catch it, so that’s why it’s important to regularly check your card statements to verify that all charges were made by you.
      • NOTE: if fraudulent charges are made and the credit card company agrees they were fraud, you won’t have to pay for them.

While there’s definitely a lot remember, the odds are you won’t always need to know all of these at a given time. But, it’s good to have your knowledge built up. We wanted to do our best to make sure you don’t learn them the hard way.

Source(s): Credit Karma, Experian

Lessons in this course:

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