#1
What are credit card finance charges?
Interest charged on outstanding balances
ExplanationInterest applied to unpaid balances.
#2
What is the APR (Annual Percentage Rate) on a credit card?
The interest rate charged on outstanding balances
ExplanationRate applied to unpaid amounts.
#3
Which factor determines the amount of finance charges on a credit card?
All of the above
ExplanationMultiple factors affect finance charges.
#4
What is the typical grace period for credit card finance charges?
30 days
ExplanationStandard time before interest accrues.
#5
Which of the following factors can affect the APR (Annual Percentage Rate) on a credit card?
All of the above
ExplanationVarious elements influence APR.
#6
Which law mandates credit card companies to disclose finance charges and APR to cardholders?
Truth in Lending Act (TILA)
ExplanationRegulates disclosure of financial terms.
#7
What happens if a cardholder fails to pay finance charges on time?
The charges are added to the next billing cycle
ExplanationUnpaid charges roll over to next month.
#8
What is the difference between a purchase APR and a cash advance APR on a credit card?
Cash advance APR is higher than purchase APR
ExplanationDifferent rates for purchases and cash advances.
#9
What are penalty APRs, and when do credit card companies typically apply them?
Higher interest rates applied for late payments
ExplanationIncreased rates for overdue payments.
#10
How are finance charges calculated on a credit card?
Based on the outstanding balance and APR
ExplanationCalculation involves balance and interest rate.
#11
What steps can a cardholder take to avoid finance charges on a credit card?
Paying the full balance before the due date
ExplanationClearing entire balance before deadline.
#12
What is the difference between fixed and variable APR?
Fixed APR remains constant, while variable APR can change over time
ExplanationFixed rate stays static; variable fluctuates.
#13
What role does the average daily balance play in calculating credit card finance charges?
It is used to calculate interest
ExplanationDaily average determines interest.
#14
How do credit card companies typically calculate finance charges for cash advances?
By applying a higher APR than for purchases
ExplanationCash advances accrue interest at a higher rate.
#15
What strategies can cardholders use to negotiate lower finance charges with credit card companies?
All of the above
ExplanationVarious tactics to lower charges.
#16
What is the formula for calculating finance charges on a credit card?
Average daily balance multiplied by the APR
ExplanationBalance multiplied by interest rate.