Credit, Collection and Compliance

Application # 3 - Managing Credit

1.  What type of billing cycle does each card offer?

Visa, Mastercard, American Express and Discover billing cycle for credit cards
usually lasts 28 to 31 days. The number of days in each month changes, the number
of days in your billing cycle may vary from month to month, but there are sets of
rules to guarantee that they are as "equal" as possible. This ensures that one important
aspect of your project remains constant: your deadline. Your due date must be the
same every billing cycle, according to the CARD Act. Additionally, your due date
will be at least 21 days after the end of a billing cycle, allowing you to make plans.
The grace period is the time in between the end of a billing cycle and the due date of
your account; if you pay off your debt within this time, you won't be charged interest.

2.  What is the length of the grace period?

Visa, Mastercard, American Express and Discover grace period ranges from 21 to
25 days. Most credit cards offer a grace period, which is a period during which you
can pay off your debt in full without incurring a finance fee. Depending on the credit
card issuer, the grace period normally begins on the first day of the payment cycle
and ends a specific number of days later. You'll have more time to pay off your
balance and avoid interest charges if you have a longer grace period.

3. What is the fee for late payments? Is an over-limit charged?

Visa, Mastercard, American Express and Discover will charge you a fine of up to
$29 for the first offense and up to $40 for additional offenses within six billing cycles
if you don't pay your credit card account on time. Credit companies may charge you a
fee if you go over your credit limit, but it can't be much more than the amount you
spend. According to the CARD Act of 2009, you must opt in to approve this cost,
which makes it different from others. When you try to spend more than your credit
limit, your creditor will usually deny your transaction, but you can pay a fee of up to
$35 and have these transactions accepted. If you don't opt in, any transactions you
attempt to make over your limit will be declined by your credit card company.

 
4. What type of interest rate—fixed or variable?

Fixed and variable loan rates are the two most common forms. Fixed interest rates
could only be changed in specific conditions, and the credit card company must give you
an ample warning prior making the modification. Variable interest rates, on the other
side, are linked to another rate and can fluctuate in response to movements in the index
rate.Interest rates are a fundamental component of several credit cards, and they play a
big factor in the penalties you could face if you miss a payment. The Fixed Rate Visa®
Credit Card is available to UNIFY members in three versions: Visa® Classic, Visa®
 Gold, and Visa® Platinum. You can get a fixed rate of nearly 9.49 percent based on the
one you qualify for. There are no yearly fees, balance transfer fees, or cash advance fees
with this card. On the other hand, The cost of borrowing on an American Express APR is
variable, that indicates it can rise or fall through the duration depending on adjustments in
the index rate it's linked to, such as the prime rate. When the index rate rises or falls, so
does the APR on the American Express card. Most credit cards include variable annual 
percentage rates (APRs) that change in response to a specific standard, such as the prime
rate. For example, if the prime rate is 4% and your credit card charges the prime rate +
12%, your annual percentage rate (APR) will be 16%.

5.  Rates for cash advances?

Credit card companies generally impose a cash advance fee of 3% up to 5% of the

entire amount of each cash advance you seek. Cash advances may appear to be a
convenient way to get money quickly, but they come with a huge cost. As per Star
One Credit Union (2022), Visa Signature Rewards 8.75% Visa Platinum Rewards
8.75% to 12.75%, based on creditworthiness Visa Platinum Best Rate 7.75% to
13.75%, based on creditworthiness. Meanwhile, as stated by Wallethub (2020), the
MasterCard cash advance fee is either 3% or 5%. The majority of the credit cards
under MasterCard's network have a 5% cash advance fee, however, there are some
exceptions. All of the following cards have a 3% cash advance fee: Capital One
QuicksilverOne Cash Rewards Credit Card. Next is the American Express Cash
Advance service enables you to withdraw money from authorized ATMs up to your
card account's applicable cash advance limit. A cash advance fee is either $5 or 3% of
the transaction, depending what is bigger as reported by Cain (2017). According to
Staples (2021) , Discover credit cards charge a cash advance fee of either $10 or 5%,
whichever is greater.

 
 

Reference:
Cain, S. L. (2017, September 29). How to get an American Express cash advance. Credit Karma.
https://www.creditkarma.com/credit-cards/i/american-express-cash-advance

Irby, L. T. (2022, January 31). What is a credit card cash advance fee? The Balance.
Retrieved from https://www.thebalance.com/credit-card-cash-advance-fee-explained-
959991

Irby, L. T. (2021, August 29). A simple explanation of your credit card Grace Period. The
Balance. Retrieved from https://www.thebalance.com/credit-card-grace-period-explained-
960699

Luthi, B. (2018, December 12). What you should know about fixed-rate credit cards. Credit
Karma. https://www.creditkarma.com/credit-cards/i/fixed-rate-credit-
cards#:~:text=UNIFY%20offers%20members%20the%20Fixed,fees%20or%20cash
%20advance%20fees.

Person. (2018, October 14). What is the Visa credit card grace period? WalletHub. Retrieved
from https://wallethub.com/answers/cc/visa-credit-card-grace-period-2140670957/

Staples, A. (2021, January 19). How to get a cash advance with Discover. CreditCards.com;
CreditCards.com. https://www.creditcards.com/card-advice/discover-card-cash-advance/
#:~:text=Discover%20credit%20cards%20charge%20a,5%25%2C%20whichever%20is
%20greater.

Star One Credit Union. (2021). Visa Credit Card Interest Rates as low as 8.75% APR - Star
One Credit Union. Starone.org. https://www.starone.org/cards/interest-rates/

WalletHub. (2020, September 29). Mastercard Cash Advance Fee. WalletHub.

https://wallethub.com/answers/cc/mastercard-cash-advance-fee-2140676643/

Wallethub. (2021, March 29).  Is an American Express APR Fixed or Variable? (n.d.).
WalletHub.https://wallethub.com/answers/cc/is-american-express-apr-fixed-or-variable-
2140745100/#:~:text=An%20American%20Express%20APR%20is

White, A. (2021, October 28). What is a cash advance and how do they work? CNBC.
Retrieved from https://www.cnbc.com/select/what-is-a-cash-advance-and-how-do-they-
work/

White, A. (2022, February 7). 8 common credit card fees and how to avoid them. CNBC.
Retrieved from https://www.cnbc.com/select/how-to-avoid-common-credit-card-fees/