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A Closer Look at Credit Cards By law, credit card companies must provide new cardholders with a Credit Card Disclosure . It’s an important document — sort of like an operator’s manual. You may think you know how your credit card works, but you really won’t understand it until you read the Disclosure. Don’t assume you know, or that your credit card is like your friend’s, because credit cards are not created equal . In fact, they can be very different. Knowing exactly how yours works helps keep that little beast on the leash. Let’s investigate! Use the Credit Card Disclosure on the prior page to answer Questions 1–10 , then answer questions 11–20. 1. Congratulations! Your bank just sent you a brand new credit card. Let’s get to know it! What is the APR on this credit card? Are there more than one? _ ______________________________________________________________________________ _ ______________________________________________________________________________ 2. You really didn’t get to know your old credit card very well and ran up a lot of fees. You’re being very careful with this one. You especially want to avoid triggering the Penalty APR. How much is that and how can you avoid triggering it? What if you have a late payment on a different card that you hold with the same bank? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ PRODUCT PREVIEW 3. Wow. You thought credit cards only had one or two fees. There are ten (!) different fees that apply to this card! Name them: _ ______________________________________________________________________________ _ ______________________________________________________________________________ 4. Even if you never use this card, what fee must you pay every year, just to own it? How much is that? _ ______________________________________________________________________________ 5. You decide to move a balance of $1500 from one of your old credit cards to this one. What APR applies to the transferred funds? Will you pay a fee to transfer this balance? If so, how much? _ ______________________________________________________________________________
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 257
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