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What is credit utilization?

Credit utilization measures how much you're spending of your available credit limit from all cards combined. 

For example, let's assume you have three different credit cards, with individual credit limits of $1,000, $4,000 and $5,000. Your total available credit will be the sum of these credit limits: $10,000. 

Let's also say your current balances on these three cards are $350, $500, and $150. Your total outstanding balance is the sum of these: $1,000. 

What is the difference between a balance transfer fee and a balance transfer rate?

A balance transfer fee is a one-time fee you are charged when you transfer a balance from one credit card to another. The fee covers the administration of the actual transfer of funds. Most balance transfer fees are somewhere around 3-5%, but many issuers offer lower fees or even waive them entirely for a promotional period. Check the fine print for time restrictions if a card is offering a transfer fee promotion; sometimes the transfer must be initiated on your card application or within a certain time frame of your being approved for the card (i.e. 30 days).

What's a balance transfer?

If you already have a credit card and you apply for a new one, you can transfer your existing balance on the previous card to the new one. Effectively, the new credit card issuer will assume the outstanding debt [that you owe on the previous card] by paying off the credit card issuer and then billing you for it.

What's a grace period?

A grace period refers to the amount of time past a given credit card bill due date during which non-payment will not incur interest fees on the balance due, provided the total balance is paid within the grace period. Grace periods vary, but usually range from 10-25 days depending on the credit card issuer.

What is the prime rate?

The prime rate is an interest rate determined by the Federal Reserve based on a variety of economic factors. 

Banks use the prime rate as the base factor in determining the interest rate given to their customers. A bank's most credit-worthy customers may receive an interest rate equal to the prime rate. Most customers will receive an interest rate on a loan at the prime rate plus anywhere from 1 to 10 percent, depending on their credit rating. 

What is the difference between a fixed and a variable APR?

A fixed APR is an APR that does not change often. Over time, a fixed APR can change due to long-term economic factors, but in this case, your credit card company must notify you of the change before it goes into effect. For example, if your credit card has a fixed APR of 18.24%, that means the APR will remain the same from month to month.

What is a default interest rate?

Often looming in the 25% to 30% range, a default interest rate is significantly higher than a credit card's standard interest rate and is the new percentage to which the interest rate adjusts when the terms of the credit card agreement are broken. Default interest rates can be triggered by events such as a single late payment or exceeding the credit card's credit limit.

Emergency Credit Services

Lost or stolen credit card? Suspect Fraud? Traveling overseas and need immediate assistance? See below for emergency links to each of the major credit card companies.

Separating Fact from Fiction

Repossessions, wage garnishments, property seizures, foreclosures— measures which strike fear into the heart of every consumer. But how do these methods of recovery play out in the real world, and whom are they used against?

The general assumption is that overdue debts will result in drastic recovery measures. Sure, if you've put up property as collateral on a loan which you are unable to pay, it will typically be seized or repossessed. But the same does not necessarily hold true for unsecured debts such as credit cards and deficiencies.

Can a Debt be Removed Without Paying?

Strictly speaking, yes. But there is a good chance that the negative debt listing will reappear on your credit report. There is a better solution than trying to avoid the debt. You can create a true win-win situation by settling your debt with the creditor.

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