Even small details count with new credit card law
By David Zizzo
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Published: November 5, 2009
As everyone knows, credit card companies compute finance charges by taking the total of your beginning daily balances plus new purchases, unpaid finance charges, fees and debit adjustments, minus payments, credits or adjustments, then multiplying by the number of trees that fall in the woods or angels that dance on the head of a pin, whichever is greater.
This is just one of the many helpful details available to any cardholder serving time in solitary confinement, because that’s the only kind of person who can stand to read terms of agreement from a credit card company, provided that person has a college degree and a magnifying glass.
However, thanks to the newly enacted Credit Card Accountability, Responsibility and Demystifying Act of 2009, the rest of society might soon be able to decipher some of that information.
So, as we enter a new era of credit literacy, here are a few terms you should know:
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Grace period: The period between the moment you charge something and the time your finance charge is assessed during which you completely forget that your finance charge will be assessed.
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Finance charge: The total cost of borrowing from a credit card company or a large guy named Vinny.
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Minimum payment: The lowest amount of money you can pay to a credit card company or to Vinny to keep either of them from imposing penalties, if you know what’s good for you.
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Annual interest rate: Percentage of outstanding balance that will be charged as a cost of borrowing, as measured in astronomical units.
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Variable interest rate: Cost of borrowing that, depending on the prime rate, index funds and Treasury securities, can extend beyond the known universe.
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Wage garnishment: Seizure of income to satisfy debts, or artichoke roses that add color and appeal to any paycheck.
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Zombie debt: Actual credit term referring to old debts that are beyond the statute of limitations.
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Nondischargeable debt: Debt that is impervious to legal tactics, small arms fire or zombies.
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