The average credit card debt across the U.S jumped a near $1,000 in the month of October, according to Credit Karma. A $1,000 debt increase in a single month for every American with a credit card is a scary number, especially when credit is still tight, jobs are scarce, and with Christmas shopping madness just around the corner.

Credit card debt is not a new problem — consumers have always had to navigate the perils of owning a credit card, from the hiked-up fees, the hits to their credit score, and the temptation to overspend on credit. The sudden increase from September to October could be a tell-tale sign of deepening consumer debts going into the holiday spending season, which means consumers need to tighten up credit usage or pay down debt if we hope to survive financially going into the new year.

Some spenders have the right idea to sidestep credit card usage altogether. A recent Credit Karma poll shows that 79% of CK users plan to use cash to pay expenses for the holidays, versus 18% who will be charging it all on credit cards (2% will pay with pre-paid card, 1% are spending gift cards). Interestingly enough, the users who plan to charge on credit cards have an average credit score of 740, while the majority cash spenders had an average score of 654. Even if you have a high credit score now, be weary about overspending these next few weeks if you opt to charge credit this season. But if you don’t want to dig deeper into debt and want to protect your credit score as you shop this season, tuck your credit card to the back drawer and consider these two old-school shopping tricks that are making a comeback:

• Layaway – Layaway programs have gone out of style since credit cards took over as the norm, but they are being offered again from the usual places like Sears and Kmart to new layaway offer from Toys R Us and online at eLayaway.com. Layaway programs allows you to put the item you want on hold, pay a fee plus a deposit of 10-20% of purchase price, and then make regular payments over a period of time until you finish paying it off and take the item home. This old-school shopping tactic appeals to people who don’t want to take to tack on more to their credit card balance and risk debt, but still want to buy something they can’t pay in full right away. Just be careful of cancellation fees and read and understand the terms of the layaway plan, and watch out for any price drops because you aren’t usually guaranteed any sales that happen after you put something on layaway.
• Re-gifting – is it really a question of ethic in the shopping world? More along the lines of socially acceptable or not, then you can talk about its financial benefits. It’s a taboo in the shopping world—to regift or not to regift? In an ideal world, it’s a perfect option: it is no cost to your credit card, your unwanted gift doesn’t go to waste, and it’s a sustainable form of shopping without the price of debt. You can decide whether or not its socially acceptable, but there is no doubt that it has many financial benefits. If you’re thinking about recycling some presents from last year, follow these pointers to avoid a re-gifting faux pas: the item should not be used and look new and in proper giving condition; you didn’t like it, so make sure you that you are re-gifting to the right person and they will like it; wrap it up presentably; make sure you don’t give the gift back to the original giver; and most importantly, make sure you can get away with it.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!

Having extra money set aside can be a real lifesaver later on in life should you ever run into a financial emergency, want to put a down payment on a home, start your child’s college fund, or start your own business. Here are some saving and investing opportunities that will make the most of any amount of spare money, from your pocket change to your golden nest egg .

If you have a $100…
Saved up a few hundred? Open a high-yield online savings account that will allow you to earn the highest interest on your sitting money. Our top picks that do not require a minimum balance include Ally Bank’s online savings account with 1.70% yield, HSBC Direct’s 1.35% APY, and ING Direct’s Orange Savings with 1.30% APY. Or you can go to MoneyAisle to compare APY rates yourself.
Tip: Be on the lookout for any minimum deposits or minimum balances that some high-yield accounts require that may make you ineligible for stashing your money there.

If you have $1000…
If you don’t plan to touch your money for a period of time, a Certificate of Deposit (CD) might be a good place for your money’s safe-keeping. CDs offer a higher interest rate 1 to 2 percentage points higher than savings accounts. What’s the catch? For the term of your CD (anywhere from 9 months to a few years), you cannot withdraw or deposit additional money or you will pay a penalty. If you are confident you won’t be itching for your money, shop for CDs according to their life span, minimum deposit, and rate—1.75% APY on an 18 month CD at Citibank, 2.25% APY on a 24 month CD at American Express, or a 2.75% APY for a 3 year CD at Discover.
Tip: The 12 month 2.00% APY CD with Discover offers no-penalty access and no-fee early withdrawal, which is a good option in a time of job insecurity and recession.

If you have a $10,000…
Wall Street’s encouraging market rally maintaining over 10,000 points make now a promising opportunity to invest in stocks and potentially reap big rewards. Whether you are a first-timer or a trading veteran, $10,000 is a good investment towards a few top-notch stock funds or to diversify your stock portfolio. Online trading webistes like TD Ameritrade, TradeKing, Zecco, and ShareBuilder offer online convenience and low cost per trade that makes it easy to invest your money.
Tip: Good news for new traders: both TradeKing and ShareBuilder are offering a bonus to new accounts.

If you want to do a good deed…
An alternative place to put your savings is investing in a peer-to-peer loan or microloan. While this may not pad your bank account as much as the above options, the pay-off is that you this alternative to traditional banks helps other people and supports a good cause. Both Prosper and Lending Club allow you to choose who you want to help finance through small, personal loans. Kiva, a microloan lending platform, connects you to third-world entrepreneurs to help finance projects for impoverished communities.
Tip: P2P sites like Prosper and Lending Club offer great 7%-13% estimated returns for lenders.

Put that extra cash where it belongs
Finding the right place to save or invest extra cash will pay off later as interest rates continue to drop, jobs start to stabilize, stock markets keep surging, and your money will be financially fit for an economic boom.

Becoming a millionaire seems like an impossibility since the past decade’s get-rich bubbles in real estate, dotcoms, and stocks have burst and left most Americans worried about earning a regular salary, let alone millions.

Becoming rich won’t happen overnight, but it can happen over time. It takes good, consistent habits and before you know it, you’ll be a lot closer to millionaire status than you were before reading these 7 tips:

1. Finally get rid of your debt! Your credit card debt is a black hole of interest and never-ending, unpaid debt for all your hard-earned savings. The average American carries a $6,000 balance on their credit card and a typical credit card APR is 14.9%, so if you paid the minimum payment of $100 a month, it would take little over 9 years to pay off your balance. On top of that, you will have racked up $5,074 in interest charges! Start focusing your current cash flow on paying off your debt now so you can avoid potentially paying double your original debt in interest charges in the long run.
2. The old piggy-bank method, reinvented - Let’s take out the calculator again, but let’s focus on saving rather than debt reduction. If you saved $500 a month and put it in a savings account like Ally Bank’s high-yield 1.75% APY online savings account, in 10 years you will have $60,553.84 saved up! If you keep this up for the next 45 years, you’ll be sitting on a $270,000+ nest egg when you retire. Or you can opt for a CD with an even higher interest rate, like Discover’s 3 year CD with 2.75% APY, which will yield a whopping $430 in interest with an initial deposit of $5,000 by the end of the CD’s term.
3. Trade your credit card for a debit card, secured card, or cash - There is nothing evil about a credit card, as long as you know how to use it responsibly. For consumers overspending on credit or paying late or not at all, sticking to credit card alternatives like a debit card, secured card, and cash is the best way to avoid the debt and interest charges and keep up a healthy credit report. And seeing your spending directly shrinking your bank account might make you think twice about your purchases.
4. Shop around for loans – Not all loans are alike, and with a little bit of research and comparing, you can save a substantial amount of money by looking for a loan with the best terms and rates that fit your needs. If you are a student, use SimpleTuition to do all the loan searching and work for you. For any other type of loan—from opening up your first restaurant to paying off your car—check out Prosper and Lending Club for a person-to-person lending platform that has reduced rates for lenders (as opposed to going to a bank) and are perfect for short-term and smaller loans.
5. Invest! – On that note, you can also invest in the P2P platform of Prosper and Lending Club to get a high rate of return, ranging from 8-20%, while also helping out fellow consumers.
6. Cut a little, save a lot – Start making coffee at home and deposit the $4 you would’ve spent every weekday morning in a savings account, and within a year you will be $1,008 closer to becoming a millionaire. If you usually eat out for dinner and opt to go out 2 times a week and cook the other 3, that adds another $3120 a year to your savings. If you want to take this saving thing seriously and cut out your annual Tahoe ski trip and New Year’s Las Vegas trip, your “staycation” could save you another $3,500+ or more. With these three suggestions, you could savea possible $7,628 to deposit to your piggybank.
7. Sell on eBay! – Think you have nothing to sell, it’s too complicated, or it takes too much time? Millions of people buy and sell on eBay and millions of dollars are exchanged because it can be profitable and effective if you do it right. Check out this blog, “Sell it Now—how to make hundreds of dollars in 37 minutes,” and see how to make your mint-condition Beanie Babies collection can help make you a millionaire.

Start Today
Getting rich slowly may not be your ideal way to hit seven figures, but it’s certainly the most practical and realistic. Building your personal wealth is hinged on simple ideals of saving more, spending less, dealing with debt, and being financially responsible over a longer period of time.

If you’re in the market for a new car, TrueCar will help you drive off the lot knowing just what kind of deal you got. TrueCar aims to make the car purchasing process honest, transparent, and fair by providing consumers recent, local data of new car sales specific to the make, model, trim, and option of any vehicle. Before, haggling for hours over the price of a new car was a rite of passage every consumer had to go through. Now, by knowing the average price other consumers paid for a specific car, you can arm yourself with the tools you need to get a better deal on any new car purchase simply by being an informed, empowered consumer.

TrueCar makes understanding the negotiation process between car dealer and customer super simple. They develop a Price Report for the particular vehicle you want by aggregating data from many different sources of how much car buyers in your particular geographic area actually paid for the exact car with the same options you are looking for at the dealerships. The Price Report is a simple straight-forward graphic with data that helps new car shoppers quickly ballpark a good price, a great price, and the average price paid for a specific car. It also details the mark-up on all option packages as well as the actual dealer cost, factory invoice, and the sticker price many car salesmen try to hold buyers too. TrueCar also shows you the average price paid over the last six months for the vehicle. This is especially nice, since incentives and government programs like Cash for Clunkers can shift negotiation power quickly.

How do you use this data to negotiate a better price? Print out the Price Report and take it with you when you go shopping for that perfect car. While the car salesperson may pace back and forth to their manager to settle the price, you can remain steady in your offer price as you have a TrueCar Price Report in hand. Now, if you find yourself at the dealer wanting a different color, or a couple more add-ons, don’t worry; you can call TrueCar and they will email you an updated Price Report to your iPhone or Blackberry.

One thing TrueCar can’t help you with though—new car financing. Make sure you have a strong credit score in hand when you head to the dealership. Also, do your research and know what financing offers are available to you from the dealers as well as APRs you can get from going direct to Capital One Auto Finance or Up2Drive. In addition to financing, check with your auto insurance company regarding insurance coverage costs for that car you’ve been eyeing. You need to be able to afford much more than just the new car.

New car shopping has always been one of those events you never walk away feeling good about: you are suddenly worried you gave in too much or left wondering if you really did get a good deal like the salesperson kept telling you. TrueCar helps set a fair and transparent price for new cars in the market everyday so you can get your new set of keys worry-free.

Do you know how the economy is doing nowadays? Is there still a credit crunch? And can your credit score survive through it all? Not to worry, our weekly round-up is geared towards keeping you in the know on the economy, while also keeping you on your toes on how to keep your credit healthy through it all.

Personal Finance

• SmartMoney asks, Thirtysomething and strapped: what to do?
• GetRichSlowly blogs about sweating the big stuff.
• USAToday poses the difficult question of how do college students build credit history as rules change?
• US home loan demand at 3-month high as rates fall reports Reuters.
• The Washington Post tells the story of how Frank bemoans pace of housing help.

Credit Reports and Credit Scores

• Stay far, far below the credit limit advises the Los Angeles Times.
• MainStreet teaches you how to spot and fix credit report errors.
• Knoxvillebiz.com tells another side of the credit story, writing that credit line cuts aren’t always painful.

Credit Cards

• Credit card holders may benefit from reevaluating their plastic writes the Los Angeles Times.
• The Washington Post wonders if banks ease burden of credit card debt.
• BusinessWeek blows the whistle on card issuers dodging credit-card reform.
• MainStreet tells how to Prune with Plastic: Save Money Using Credit Cards.

Debt

• Los Angeles Times gives us some good news: U.S. consumers cut debt by record $21.6 billion in July.
• Geithner says Americans saving more after accumulating debt reports Bloomberg.com.
• The New York Times posts that overspending on debit cards is a boon for banks.

Credit Karma

• The Wall Street Journal reports on credit scores: what you need to know now.
• Wealthy families face bankruptcy on real estate crash news straight from Bloomberg.com.
• Credit scores remain stable in August @ MarketWatch.
• Clean up your credit and save $100,000 – The Motley Fool shows you how.

Wouldn’t life be easier if understanding the pages of incomprehensible data that make up your credit report and your seemingly arbitrary credit score were as easy as learning your ABCs? The Credit Report Card does just that, breaking down your credit report data into a simple, easy-to-understand A-F letter grading system detailing your performance in each of the five main components that comprise your credit score–credit history, on-time payment history, credit utilization, total accounts, and credit inquiries. The Credit Report Card also compares your credit score to other Credit Karma members so you can see how you rank against your peers.

Let’s start with credit card utilization (CCU). You need to keep your CCU, which is your total credit card debt divided by total available credit on your credit cards, between 1% and 20% to get an A on the Credit Report Card. If you go over that and carry between 21% and 40% CCU, prepare for a possible drop in your credit score, as Credit Karma users with a corresponding B credit grade had an average credit score 36 points lower than those with an A credit grade. Don’t use those credit cards regularly, don’t expect an A credit grade. If your CCU is 0%, meaning you are not utilizing the credit that card issuers have extended to you, your credit grade is most likely a C. Members of Credit Karma with a 0% CCU experience an average credit score of 658, for many that 73 point difference from an A credit grade to a C will likely impact their ability to get approved for additional credit cards or the APR terms of a home loan.

Next, on-time payments. Slip even a little bit in this category and your credit grade can plummet from an A to an F. Each bill payment out of 100 that you miss will drop your on-time payment credit grade a full letter grade, with 100% on-time payments getting you an A, 99% on-time payment, which is one missed payment out of 100, is a B, 98% is a C, 97% is a D, and 96%, or missing four bills out of 100, will get you a F. Average credit scores of consumers with credit grades A to F span a range of 135 points, from 706 to 571. You’ve heard it from every financial blog and article because it’s so terribly important: pay your bills on time. Set up automatic payments through your bank, check that every envelop is stamped, mark your calendar—just don’t miss a payment.

Lastly, average age of open credit lines is a metric that consumers have limited control over. The best things you can do is to open a credit card as a college student, use credit regularly and responsibly, make on-time payments, and most of all keep old credit lines open. While only 10% of the Credit Karma community has the experience of 8 or more years of open credit lines in order to get an A credit grade, 59% of Credit Karma users have credit lines 4 years old or younger, landing them in the C, D, and F credit grades. It’s obviously not something you can rush, so hold on to your oldest credit card and let the years roll by.

Figuring out your credit score seems like a complicated equation when data-rich credit reports can obscure the direct impact of your credit actions and history. But look to the Credit Report Card to help you better manage your credit because plain, simple English and bright colorful charts make financial management more fun than you ever thought personal finance could be.

With the new school year just around the corner, count on student loan websites SimpleTuition and GreenNote for last-minute help to secure money for everything from dorm rent to the first semester’s textbooks. The average $25,000 sticker price for a college education is making it harder for students to make ends meet after Dad and Mom are all tapped out, federal aid still isn’t enough, a part-time job is impossible with a student schedule, and there are still bills to be paid. At the eleventh hour, SimpleTuition and GreenNote are your loan alternatives to cover your education and all your student expenses, and still have money left-over to eat more than just noodles every day.

Picking a loan has never been so easy

SimpleTuition is a loan search engine that matches private and federal loans to your financial situation and takes the work out of searching hundreds of student lenders to find the best student loan option for you. Once you input information such as your college and requested loan amount, the site generates an easy-to-compare chart of big and small lenders. I was able to compare PNC Bank, Sallie Mae, and Federal Stafford Loans to see who could offer me the lowest APR, most affordable monthly payments, along with the shortest repayment period

Finding last-minute funding through SimpleTution is especially valuable to the busy student because SimpleTuition does all the legwork of comparing all types of loan options. There is a lot of money to be saved by comparing different loan options before you make a decision. Students can also get support at SimpleTuition through a wealth of information-rich resources like a student loan blog, federal aid programs, advice on choosing the right loan, and tips on how to get better loan rates. Having all the information you need to know about loans in one spot makes the site especially useful and a good learning tool for students new to loans.

With time running out and tuition bills needing to be paid in full this semester, SimpleTuition offers an efficient search process to help you save you money from the convenience of your computer.

“Get student loans from people who believe in you”

That’s GreenNote’s tagline, reflecting a unique, non-traditional loan alternative that enables you to arrange loan agreements within your own personal network of family friends. GreenNote works like this: students ask their personal social network for small loan pledges via email. Once your loan pledges, each pledge of a $100 minimum, reaches $1000, GreenNote verifies and packages them into a single loan agreement between the student and the Pledgers.

How do the pledges get repaid? GreenNote handles all the paperwork, including the billing, servicing, and repayment allocations. For the student, the best feature of this unique peer-to-peer lending platform is that it lets your pledges select “gift my pledge” to the student as a much-appreciated graduation present. Let’s see a big bank do that.

While the 6.8% APR, which tends to be lower than traditional student lender terms, is sweet for the student, Pledgers should keep in mind they may never get the money back – this happens to lenders all the time. At GreenNote, there are no credit score requirements, no reviewing the credit report, and no co-signer requirements. While the pledges likely do know where you live, their options are limited if you default on your loan.

Borrowers get into the dangerous waters of involving financial life with personal life where a borrower’s fiscal responsibility is brought to the close attention of family members and friends alike. You may experience uncomfortable holiday moments when you look around the table and know Aunt Mary and Uncle Tom are expecting those payments come December. Be prepared for the conversations to begin revolving as much around your future job possibilities and income as much as it does your grades, classes, and dating life.

It’s almost the first day of class…what are you waiting for?

GreenNote and SimpleTuition are two easy steps to help you find the funds to pay for your college education without going through the hassle and inconvenience of tediously looking up loan offers one by one, or even being limited to traditional loan offers at all. Now you have no excuse for not paying off your student expenses when getting you through the door to higher education is only a few mouse clicks away.

Lesson 1: As a personal finance writer, I have to learn and fine-tune my financial services lexicon if I am going to write a financial services blog. Lesson 2: There is A LOT to learn.

This is a simple glossary of the terms and definitions I’ve learned so far working in an office where the 5 key components of a credit score should be second nature (credit history, on-time payment history, credit utilization, total accounts, and credit inquiries—just in case you were wondering). While there are entire websites and Wikipedia entries dedicated to defining all the need-to-know words when it comes to credit cards, home mortgage, auto loans, banks, and more, this glossary is for consumers out there, like me, who are just getting their feet wet in the financial world. Whether you are tired of Wiki-ing unfamiliar credit terms or you just want to brush up on your credit know-how, use this short and sweet guide to help you talk the personal finance talk.

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BASIC CREDIT TERMS

Bankruptcy
The B word is one of the worst negative records you can have on your credit report, and means that you request legal assistance to pay off your debt. Filing for bankruptcy is often the last resort for financial protection when you are in serious debt or the toughest of financial straits. Bankruptcy will heavily impact your credit score and remain on your credit report for seven to ten years. Additionally, bankruptcy will severely limit future chances for credit and loan approval in the near term, but it’s not uncommon for consumers to get a home loan 2-3 years after filing for bankruptcy

Charge – off
A charge-off happens when you are unable to pay off your credit card and a creditor effectively writes off your debt in their books and closes your account. This does not mean you are off the hook; you can’t make anymore purchases on your credit card and creditors will continue to attempt to collect on your account until paid in full. Creditors will generally charge-off your debt after 180 days of less-than-minimum or no payments, and the charge-off will remain on your credit report for up to seven years.

Co-Signer
A co-signer is an individual who signs off on a contract agreeing to pay off loan or credit card payments in case the primary accountholder defaults. Having a co-signer on a loan application is advantageous for people with poor credit who are seen as high-risk borrowers and need a person of good credit standing to vouch for them. The downside for the co-signer is that both the accountholder and the co-signer’s credit reports and scores is impacted by the account, so bad credit behavior or defaulting payments by the accountholder means bad news for the co-signer.

Credit
Credit is the money a lender, such as a bank or credit card company, loans to a borrower under the condition that it will be repaid over a certain period of time according to certain APR terms.

Credit bureaus
Also called a credit reporting agency, credit bureaus issue consumers their credit reports and credit scores, usually as a paid service. The three major national credit bureaus are TransUnion, Experian, and Equifax.

Credit check
A credit check is any instance when a lender, company, bureau, or even yourself looks into your credit report and credit history. Credit checks happen when you take out a home mortgage, open a new credit card, apply for any loan, buy a car, get insurance, and you apply for a job. A credit check is done by lenders to gauge your propensity to pay back a loan.

Credit history
Your credit history begins when you open up your first credit product such as a credit card, pre-paid card, auto loan, or a personal loan, and entails all of your credit payment history, credit lines, and good and bad credit actions taken throughout the course of your financial life. Everything from a late payment to requests for loans will be captured as your credit history in your credit report and may impact your credit score negatively or positively.

Creditor
A creditor is any person or company that extends credit and to whom money is owed. This includes credit card issuers, banks, loan services, bill agencies, and pretty much any financial service company that lends you money which you are obligated to pay back.

Credit report
A credit report is full of complex information about your credit history and credit use, but here at Credit Karma, we boil down it down to a snapshot of important components: credit card utilization, on-time payment history, age of credit history, total accounts, and credit inquiries. The credit report is the foundation for your credit score.

Credit reporting agency
See credit bureaus

Credit score
Your credit score may seem like an arbitrary 3 digit number, but think of it as a grade that sums up your credit report for lenders to see. Credit scores generally range from 300-850, with higher scores being indicative of less credit risk and better creditworthiness. Different scoring models, algorithms, and score ranges are used across different credit bureaus, so oftentimes the credit score you receive from one provider will not match exactly with the score from another provider. But all in all, all credit scores are correlative to a consumer’s creditworthiness and propensity to repay a loan.

Credit utilization ratio
Your credit utilization ratio is the amount of debt you have compared to your total available credit, and determines about 30% of your credit score.

Debt Settlement
Debt settlement is a service provided by a third-party agency that works with a consumer’s creditors on behalf of the consumer to negotiate a reduced amount of total debt. Debt settlement in your credit history can damage your credit score.

Fair Credit Reporting Act
The Fair Credit Reporting Act is a big victory for consumers because it regulates how credit bureaus maintain, share, and correct information on credit reports. Consumers’ rights achieved by the Act include the right to see your credit report for free at AnnualCreditReport.com, limited disclosure of credit reports to creditors, and fair, timely, and accurate reporting of your credit information.

FICO Score
The FICO score, developed by Fair Isaac Corp, is the standard credit score used in the mortgage industry by lenders to determine approval of a loan as well as the mortgage terms a lender will offer. The FICO score has become a stalwart for mortgage loans mainly due to FICO requirements on loans that are securitized and sold to the government-sponsored enterprises, Fannie Mae and Freddie Mac.

Hard inquiry
A hard inquiry is a credit check done by a lender anytime you apply for a loan. Also known as a hard pull, every hard inquiry on your credit report makes a small negative impact on your credit score; so take care not to apply for multiple loans at the same time.

Soft Inquiry
A soft inquiry is a credit check that does not impact your credit score. Also known as a soft pull, examples of soft inquiries to see your credit report include requests for background checks by employers, verification of your identity, and requests to see one’s own credit report.

Are you as credit savvy as you think you are? Did you know that the average consumer credit card debt in July was $6818, or that your credit report could shape the approval and account terms when you apply for a credit card, home loan, and auto loan? If you’ve been keeping up with our blog, you probably know many of the ins-and-outs of the credit world, but take this quiz to see if you have the financial know-how to keep up with your credit health.

1. Income is a key component of your credit score? True or False
2. What state had the highest average credit score in July?
   A. California
   B. Colorado
   C. Illionois
   D. New Jersey
3. What is the amount of credit card debt you currently have divided by your total credit available?
   A. Credit Card Utilization
   B. Credit Card Default
   C. Credit Limit
   D. Credit Charge-Off
4. What are the first two changes of the Credit Card Bill of Rights? Choose two:
   A. 30 day advance notice for arbitrary interest rate increase
   B. Issuers must deliver billing statements at least 21 days before due date
   C. Co-signer necessary for credit card applicants under 21
   D. Double-cycle billing no longer permitted
5. What credit card is best to help consumers start building or rebuilding credit?
   A. Unsecured Credit Card
   B. Student Credit Card
   C. Rewards Credit Card
   D. Secured Credit Card
6. What credit card do you rarely, if ever, want to close?
   A. Any unused credit card
   B. Most used credit card
   C. Oldest credit card
   D. Most recently opened credit card
7. Credit scores can impact your credit limit? True or False
8. Once a creditor charges off an account, the consumer is no longer responsible for payment of the debt. True or False
9. When does the $8000 First-time Homebuyer Tax Credit expire?
   A. November 1, 2009
   B. December 1, 2009
   C. December 31, 2009
   D. January 1, 2010
10. A co-signer on a loan or credit card account can expect to:
    A. Pay-off the account if the primary accountholder cannot
    B. Have the credit line added to their personal credit history and report
    C. Have their credit score affected if the primary accountholder defaults
    D. All of the above

Answers

1. False. Your credit score is determined by several factors including the length of your credit history, on-time payment history, credit utilization, total accounts, and number credit inquiries. Consider using the Credit Report Card to see a summary of your key credit factors as well as how you compare to other Credit Karma members.
2. D. New Jersey. New Jersey’s average statewide credit score for July was 694. Credit Karma’s national average consumer credit score in July was 674.
3. Credit Card Utilization. Credit card utilization basically tells you how much of your available credit you are actually using. Try to keep your total credit card utilization to 30% or less. The credit card utilization ratio of your total debt to available credit determines roughly 30% of your credit score.
4. A & B. One provision of the Credit Card Bill of Rights will be an additional 30 days advance notice for arbitrary rate increases, credit limit change, or any other ‘significant’ change to your credit card’s terms. The other provision to go into effect is that credit card issuers must deliver billing statements at least 21 days before the due date (previously 14 days). These changes go into effect August 20, 2009.
5. D. A Secured Card. A secured card is designed to help consumers build a credit history by providing them the opportunity to demonstrate responsible credit usage and regular on-time payments. A secured card requires a security deposit from the cardholder that functions as cash collateral which sets the credit limit and helps keep consumers from defaulting on their payments.
6. C. The oldest credit card. Age of credit history is a key component of your credit score, so closing your oldest card will likely shorten your credit history and could cause a significant drop in your credit score.
7. True. Credit card companies use a consumer’s credit score as a prediction of how much risk they will be as a cardholder, and determine a cardholder’s credit limit based on this assessment.
8. False. When a credit card company charges-off your debt, meaning they declared it a loss for the company, the consumer is still responsible for paying off the debt. The credit card account will be closed so the cardholder will not be able to charge to it and interest will no longer accrue on that debt, but you will still receive bills until and the creditor will attempt to collect until the entire debt is paid off.
9. B. December 1, 2009. While the deadline is a few months away, consumers are advised to begin shopping for their home now because complications like getting approval for a loan, negotiating a mortgage rate, navigating inspections, managing paperwork with escrow, and the closing process of the Tax Credit could take months to complete and first-time homebuyers definitely do not want to miss out on this opportunity.
10. D. All of the above. As a co-signer, you contractually agree to pay off the account if the cardholder does not and you are obligated to the account until it is paid off in full. Any delinquent actions reported on the account will affect your credit score as if you defaulted on the payments yourself.

Scoring:

If you missed 0-2 questions , you are a credit know-it-all and chances are you have a good credit score. But don’t sit back and think that you and your credit score are safe. Make sure you put your credit know-how to good use by being diligent about keeping your credit health in check.

If you missed 3-4 questions, you are on your way to knowing more about credit. You might know the basics of how credit works, but empower yourself to learn more specifics about your credit report, the Credit Card Bill of Rights, and more details about how to manage your credit score in the process.

If you missed more than 5 questions, you may be a New Kid on the block when it comes to credit. The ins-and outs of credit scores and credit reports may be a bit fuzzy for you. The first step towards getting a good credit score is to understand how credit works, so keep learning and build a more solid foundation of what credit is, how to use it responsibly, and how to maintain healthy credit.

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