Tips & Topics - Credit
Credit Overview
Did You Know?
If your credit card is stolen and you notify the issuer as soon as you discover it missing, the maximum amount you would have to pay on the unauthorized charges is $50.
If you only make the minimum monthly payments on a credit card balance of $1,000 (at 13 percent APR), it will take you almost ten years to pay off the debt and cost you close to $600 in interest.
If you only make the minimum monthly payments on a credit card balance of $5,000 (at 18 percent APR) it will take 26 years to pay off the debt and cost you close to $7,000 in interest.
Understanding credit and how it works isn’t easy – even for the most financially savvy New Yorkers. At the same time, just as credit can present many challenges for individuals and families, it also presents opportunities – so long as it is used properly.
According to the Federal Reserve, as of July 2009, there was $2.4 trillion in consumer credit outstanding, including $905 billion in revolving credit (including credit cards) and $1.6 trillion in nonrevolving credit. After at least five years of annual increases in consumer credit outstanding, consumer credit decreased at an annual rate of 10.4 percent in July 2009. Revolving credit decreased at an annual rate of 8 percent, and nonrevolving credit decreased at an annual rate of 11-3/4 percent.
A line of credit allows us to react quickly in emergency situations, it prevents us from having to carry excessive amounts of cash, it enables us to participate fully in the online Internet economy, and it could provide a range of other benefits depending on the features of your individual card.
This section of Your Money New York is designed to help you use credit wisely, and to avoid many of the pitfalls associated with credit cards that have led to mounting (and sometimes unsustainable) debts for so many people across the country.
The Federal Reserve has a Consumer Handbook to Credit Protection Laws, which provides a helpful overview of consumers' rights under the Truth in Lending Act and the Fair Credit Billing Act.
This section provides information on:
- Establishing Credit and Protecting Your Credit Rating
- Understanding Your Credit Report
- Opting Out of Credit Card Offers
- New Credit Card Rules
- Avoiding Identity Theft
- Minimize Credit Card Costs
- Tips for Using Credit Cards Responsibly
- Understanding Your Credit Card Statement
- Tips to Improve Your Credit Score
Next - Establishing Credit and Protecting Your Credit Rating