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By: Beenish Khurshid, San Francisco, California
BALANCE - this is how much you owe the lender at any given time. redit cards are a fundamental part of
CLOSING DATE - this is the date on which
modern life. But what is a credit card, and
your balance is due. If you do not pay the
how does it work?
full balance by this date, interest will be charged on any remaining amount.
A credit card is a line of credit - an agreement between you and a bank or financial STATEMENT - A monthly document either service - the lender. You can use a credit
sent to you in the mail or in a digital state-
card to make payments, purchases, and
ment in your lender’s website outlining
take out cash, and pay back your lender at your purchases and spending that month, a later date. This all sounds great, but
the interest rate, balance due, and due
credit cards can be tricky, and if not used
date.
right, they can lead us to a precarious financial situation.
INTEREST RATE OR APR- This is the percentage that will be charged on the balance
CREDIT CARD BASICS:
remaining after the closing date. How interest is charged is a bit complicated.
CREDIT LIMIT - this is the maximum the
lender is ever willing to lend you.
Let’s say that your balance on your statement was $6000, but you were only able 13