Calculating APR You’ve just received a credit card solicitation in the mail that offers a 4 percent APR. Your current card, which has an outstanding balance of $5,000, has an APR of 14 percent. What factors should you consider in making the decision to transfer your balance? How much interest will you save the first month by switching cards, assuming that you make no additional charges and both cards calculate interest based on the average daily balance?

Comparing Cards If you hold any credit cards, use your most recent statements to evaluate them. Make a table that compares their features, including annual fee, APR, method of finance charge calculation, and penalty fees. If you carry a balance forward on one or more cards, make a plan for paying off your cards, starting with the one with the highest costs and least desirable features.

Your Credit Score Using the information in Section 5.4.2, contact a credit bureau and obtain a copy of your credit report. What can you do to improve or maintain your credit score?

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5.4.2 Credit Reporting Lenders evaluate your creditworthiness in part by checking your outstanding debt obligations and your history of making payments. This information is reported by your creditors and compiled by companies called credit bureaus. Your consumer credit rights under the Fair Credit Reporting Act of 1971 include the right to know what is contained in your credit report, to have infor- mation reported fairly and accurately, and to dispute items on the report that you disagree with. To ensure that your credit report is correct, you need to take responsibility for regularly checking it for any errors. What is included in your credit report? Many consumers are surprised to find that their credit report contains a lot more than just information on credit accounts. Typically, your report includes previous, current, and future credit his- tory; specific information about average balances, late payments, and overlimit