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Need to Know Definitions – Credit Card Literacy

Financial literacy is the knowledge of what it takes to handle money issues responsibly. Credit is one of the subtopics of financial literacy, along with investments and secured loans. Having a healthy grasp of how credit works includes a clear understanding of the application process and the language used to explain it. Here we present in simple language the terms used to help broaden your credit literacy.

Gas credit cards enable card members to save some money for every fuel stop. Normally, these kinds of cards permit the card holder have anywhere from 3% or 5% cash back for his or her fuel bills. Additionally every time you pay for gas you gain reward points which you can then give gas stations as a swap to get bonuses, discount rates, plus more. Should you attain the specific quota provided by the credit card provider, you may also ask for the rebate in the form of a check.

A Credit Score is the rating of an individual's handling of credit based on statistical analysis to determine eligibility for additional credit accounts. Consumer factors that are used to calculate a score include whether payments are made on time, the amount of current debt and available income. Lenders rely heavily on credit scores to help determine the eligibility of a loan applicant. Three agencies create consumer credit scores, Experian, Trans Union and Equifax. Lenders look at one, two or three of the individual reports to help in their decision; a score over 680 is considered a good-excellent credit rating. The lower the score, the harder it will be for applicants to find loans at low interest rates. Capacity is an estimate of the maximum amount of debt you can expect to responsibly handle based on your financial ability such as length of employment, salary and current level of debt. Excellent capacity is a low ratio of debt versus income. Low capacity is a result of sporadic employment, poor management of credit accounts or low wage jobs.

Capital is the sum of your total assets, including cash in the bank, your home, stocks, bonds and investments. A Charge Card is a credit card, such as an American Express or Diners Club card, that requires full payment of the balance each month.

Co-Signer is a person who agrees to share responsibility with the primary applicant for a loan or credit card. Anyone under the age of 21 will need a co-signer to get a loan or proof of adequate income to cover the payments. Collateral are the assets you own that may be used to guarantee repayment of a loan and can be liquidated by a creditor to that end, if you default on the account.

Also when going into a gas station, keep an eye out on those in store purchases. Goods such as candy bars, potato chips, coffee or additional grocery store items tend to be marked up pretty heavily. Purchasing these things in large sums or frequently means that virtually any financial savings you made on your gas purchase can be quickly dropped with only a few of these types of purchases inside the store.

You'll want to pay the balance of these cards off promptly. In order to get the greatest benefit you need to pay this card off fully every billing cycle. If you can't, you are likely to be hit with interest tacked onto your total. That charge will probably offset the earnings you would have earned. The simple answer here is to assure you pay your card off the whole amount all the time.

Gas cards can save you big money. Make sure you look at all the choices out there and apply for one that best suits your requirements and you will be getting discounts in no time.

Harris Smith offers advice on home equity line of credit and obtaining credit. Consolidate your debt with a Debt Consolidation loan.

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