What Is a Charge Card?

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A charge card represents a loan from a bank or credit card company in exchange for interest paid on charges. Be aware of changes in interest rates on credit cards with advice from a financial consultant in this free video on money management and personal finance.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

Do you have kids? Have you ever given them a charge card? Charge card represents a loan that a bank has given to you. In exchange for that loan, any part of that money that you use, they're going to charge you interest on. It makes good sense to look very carefully at what that rate is, as it tends to be very high. Read the perspectives carefully so that you understand what you're going to be liable for up the road. Now, in today's world, it's very competitive in a credit card situation, so you may very well want to shop for the best rate that's available. One thing that typically happens in credit cards, though, is the company has the right to change that rate whenever they want. You may not like that and may want to pick a plan where that rate is fixed. Beginning in 2010, that law changes a little bit and the credit card companies' ability to change rates is going to decline so that you, the consumer, will be more protected. Hope that helps a little bit. Be very careful with your credit cards. You're better off using them as little as possible. I'm Roger Groh, and thank you very much for spending time with me.

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