Page 327 - Keys To Community College Success

■ Phishing emails. Phishing is a technique for obtaining private information illegally. An
email appearing to come from a legitimate business such as your credit card company
asks you to verify information such as your social security number or PIN number. If
you click on the link in the e-mail, you are taken to a fraudulent website where any
personal information you enter can be stolen. To avoid phishing scams, do not
respond to any e-mail that asks you to enter personal financial information. Your real
bank and credit card companies would never ask you for it via email.
■ Identity theft. The downside of technology is that identity theft makes a mess of
hundreds of thousands of people’s finances each year. Do your best to prevent it
by holding on to receipts, shredding documents when you are done with them,

KEY 11.6 Learn to use credit carefully.

WHAT TO KNOW ABOUT . . . . . . AND HOW TO USE WHAT YOU KNOW

Account balance. A dollar amount that includes any Charge only what you can afford to pay at the end of the month. Keep track
unpaid balance, new purchases and cash advances, finance of your balance. Hold on to receipts and call customer service if you have
charges, and fees. Updated monthly. questions.

Annual fee. The yearly cost that some companies charge Look for cards without an annual fee or, if you’ve paid your bills on time, ask
for owning a card. your current company to waive the fee.
Annual percentage rate (APR). The amount of interest Shop around (check Studentcredit.com). Also, watch out for low, but tempo-
charged yearly on your unpaid balance. This is the cost of rary, introductory rates that skyrocket to over 20% after a few months. Always
credit if you carry a balance in any given month. The higher ask what the long-term interest rate is and look for fixed rates (guaranteed
the APR, the more you pay in finance charges. not to change).

Available credit. The unused portion of your credit line, It is important to have credit available for emergencies, so avoid charging
updated monthly on your bill. to the limit.
Cash advance. An immediate loan, in the form of cash, Use a cash advance only in extreme emergencies because the finance charges
from the credit card company. You are charged interest start as soon as you complete the transaction and interest rates are greater
immediately and may also pay a separate transaction fee. than the regular APR. It is a very expensive way to borrow money.
Credit limit. The debt ceiling the card company places on Credit card companies generally set low credit limits for college students.
your account (e.g., $1,500). The total owed, including Owning more than one card increases the credit available, but most likely
purchases, cash advances, finance charges, and fees, cannot increases problems as well. Try to use only one card.
exceed this limit. Managing Money

Delinquent account. An account that is not paid on time Always pay on time, even if it is only the minimum payment. If you do not pay
or one where the minimum payment has not been met. on time, you will you be charged substantial late fees and will risk losing your
good credit rating, which affects your ability to borrow in the future.
Delinquent accounts remain part of your credit records for years.
Due date. The date your payment must be received and Avoid late fees and finance charges by paying at least a week in advance.
after which you will be charged a late fee.

Finance charges. The total cost of credit, including interest, The only way to avoid finance charges is to pay your balance in full by the
service fees, and transaction fees. due date. If you keep your balance low, you will be more able to pay it off.
Minimum payment. The smallest amount you can pay by Making only the minimum payment each month can result in disaster if you
the statement due date. The amount is set by the credit card charge more than you can afford. When you make a purchase, think in terms
company. of total cost.
Outstanding balance. The total amount you owe on If you carry a balance over several months, additional purchases are hit with
your card. finance charges. Pay cash for new purchases until your balance is under
control.
Past due. Your account is considered “past due” when you Look for past due accounts on your credit history by getting a credit report
fail to pay the minimum required payment on schedule. from one of the credit bureaus (Experian, TransUnion, and Equifax) or myFICO
or Credit Karma.

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