Credit Card FAQ

Yes, there are several options available.

While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval.

If these options do not work you can get secured credit card which is backed by your own bank account.

Whereas few, if any, credit cards issued by retailers have annual fees, some credit cards issued by financial institutions have annual fees. These may range from $15 to $25, and perhaps $35 to $60 for "premium cards" that provide a higher line of credit. (And charge accounts, such as American Express or Diners Club, have annual fees that probably exceed annual fees charged for bank cards.)

If you usually pay your credit card accounts in full each month and do not expect to pay a finance charge, you should shop for a credit card with no annual fee or one that is low.

However, if you often don't pay the balance in full each month, then a low APR may be better for you than a low annual fee. A credit card solicitation must disclose any annual or other periodic fee, and certain other fees if they are imposed.

Under the TILA, every solicitation for a credit card must contain a brief disclosure statement. Disclosures more extensive in nature are due before the first time you use the credit card you have applied for, and specific disclosures about finance and other charges and transactions are required with your periodic statement (usually monthly).

Many states impose rate ceilings on retail or bank credit cards. However, these limits do not always apply across the board. For example, under federal law national banks may "export" their finance charge rates on credit cards. (State-chartered, federally insured institutions generally have the same exportation rights.)

Thus, a national bank may issue cards from an office in South Dakota, a state that has no rate ceiling on bank cards, so the bank may charge cardholders in Iowa any rate the agreement specifies.

Nonetheless, if you believe that the rate being charged violates state law, you should report the case to the Office of Consumer Protection (or similar office) or your state's attorney general.

Competition and enforcement activities usually prevent such violations, but if there is a violation, you may be able to recover all of your finance charges plus a penalty, depending upon your state's law.

In your disclosure statement, you may find statements about how the company will charge transaction fees for cash advances, and fees for paying late or exceeding the credit limit.

There may be other fees as well, such as replacement card fees, copy fees, wire transfer fees, and insufficient funds fees.

The law requires credit grantors to quote the APR and to tell you the balance calculation method they use to figure the finance charge you pay.

Since credit grantors use many different methods to compute that balance to which the APR is applied, credit grantors who quote identical APRs may charge you very different dollar finance charges each month. It depends on how you use the account and how they calculate the unpaid balance for assessing the charge.

Many credit cards offer a grace period for prepayments, which is the time between the end of the billing cycle and the date that you must pay the entire bill to avoid paying a finance charge. It is usually between 20 and 25 days. The grace period is shown on the disclosure statement.

Note that the full balance must be paid each month to avoid finance charges and that the grace period applies only to purchases. If you obtain a cash advance on your bank credit card, you will almost always pay finance charges from the date of the advance and probably a cash advance fee as well.

Not if there is a variable-rate provision.

More and more credit card issuers set APRs that vary with some interest-rate index, such as the market rates on three-year U.S. Treasury bills (T-bills) or the prime rate charged by banks on short-term business loans. These issuers must disclose in their solicitation to you that the rate may vary and how the rate is determined.