Garth was amazed to hear that his friend Lindsey always pays off her credit card balance each month. Garth just assumed that everyone used credit cards the same way - buy now, pay later - only in his case, months later. He buys almost everything he needs or wants, including clothes, food, and entertainment with his card. When Lindsey asked him about the balance calculation method, APR, grace period, or other fees and features of his card, Garth was clueless. He reasoned that his credit card was a safe and convenient way to shop and it allowed him to buy expensive items by paying minimum monthly payments. Overall, Garth thought of himself as a responsible credit user, despite the fact he had been late making a few monthly payments, and, once or twice, had gone over his credit limit. He also uses his card regularly to obtain cash advances. After hearing all of this, Lindsey is worried about her friend. She has come to you for help in answering the following questions.

To maximize the benefit from transferring his credit card balance to another card, Garth should follow these guidelines:(Select all that apply.)

A. Pay as much as possible on the account to reduce the balance before the low rate expires.

B. Determine the length of the grace period of no interest on transferred balances (if any) and the length of the lower, "teaser rate" period.

C. Ask how long the transfer process will take to insure no missed payments on the original card.

D. Maintain the old credit account for the benefit to his FICO score, but use it only when he can definitely afford to pay the bill in full so as not to incur interest charges.

E. Don't transfer a balance to a card with a balance, because he will likely lose any grace period for the transferred balance.

F. Comparison shop to find the card offer with the best possible interest rate/fee structure.

G. Not open additional credit accounts because opening too many accounts in a short time frame would likely reduce his FICO score.

After Garth's latest credit card application was rejected, he should consider taking action by:(Select all that apply.)

A. if he really needs another card, he could apply with another credit card company, as every lender uses different criteria for screening and evaluating applicants. Rejection from one company does not mean Garth could not get another credit card. However, he should consider the impact on his FICO score.

B. if he really needs another card, he could apply again within 60 days of the credit denial. Garth can submit his rejection letter to request the lender use different criteria for screening and evaluating this time. However, he should consider the impact on his FICO score.

C. contact a representative of the credit card company, or if a local bank, the credit card manager to determine why he was rejected. Garth will then need to take the necessary steps to correct the problem, such as correcting inaccurate information in his credit history or changing his credit use and payment practices.

D. within 60 days of the credit denial, Garth can submit his rejection letter to request a free copy of his credit report from the credit reporting service used by the credit card company. He should carefully review the report for accuracy and correct any inaccurate information. He could be the victim of identity theft.

E. contact a representative of the credit card company, or if a local bank, the credit card manager to let them know he will apply with another credit card company that uses different criteria for screening and evaluating applicants. He could be the victim of identity theft.

After Lindsey's crash course on credit education, Garth decided to discipline himself by closing a couple of his older accounts. Is this a good strategy?(Select the best answer below.)

A. Because the FICO score is typically based on factors such as: length of credit history, other types of credit used, and the amount of debt outstanding relative to the total credit availability, Garth may not want to close his older accounts. Obviously, keeping a higher FICO score should not be the only considerations. If the accounts have annual fees, while other available accounts do not, closing the accounts could be a good idea, particularly if he has other long running accounts. Also, if he will be tempted to abuse the available credit limits, closing the accounts is a better idea than risking credit overuse.

B. Because the FICO score is typically based on factors such as: length of credit history, other types of credit used, and the amount of debt outstanding relative to the total credit availability, Garth may want to close his older accounts. Obviously, keeping a lower FICO score should not be the only considerations. If the accounts have annual fees, while other available accounts do not, closing the accounts could be a good idea, particularly if he has other long running accounts. Also, if he will be tempted to abuse the available credit limits, closing the accounts is a better idea than risking credit overuse.

C. Because the FICO score is typically based on factors such as: length of credit history, other types of credit used, and the amount of debt outstanding relative to the total credit availability, Garth may not want to close his newer accounts. Obviously, keeping a lower FICO score should not be the only considerations. If the accounts have annual fees, while other available accounts do not, closing the accounts could be a good idea, particularly if he has other long running accounts. Also, if he will be tempted to abuse the available credit limits, closing the accounts is a better idea than risking credit overuse.

D. Because the FICO score is typically based on length of credit history, Garth may not want to close his older accounts. Obviously, keeping a higher FICO score should not be the only considerations. If the accounts have annual fees, closing the accounts would not be a good idea, particularly if he has other long running accounts. Also, if he will be tempted to abuse the available credit limits, closing the accounts is a better idea than risking credit overuse.

Should Garth have problems with his credit card payments, he could consider the following options:(Select all that apply.)

A. Check to be sure he has the most expensive credit card available given his card usage and payment history.

B. Use savings to pay off current credit card debt, but only in an extreme situation, as this defeats the idea of saving for future goals.

C. Explore the availability of other credit options, such as a secured loan, home equity loan, or other loan that would be less expensive than the credit card.

D. Obtain a new credit card with a high interest rate and transfer all current balances to the new card.

E. Check to be sure he has the least expensive credit card available given his card usage and payment history.