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Finance (FINC) Test 2 Practice

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Before using a new credit card, what information must the issuer disclose by law?
Correct Answer:
The rate of interest and method used to compute finance charges
Explanation:
The main idea is that lenders must clearly disclose the cost of borrowing before you use the card: the interest rate and how those charges are calculated. This means the annual percentage rate (APR) and the method used to compute finance charges (for example, a daily rate applied to the balance with periodic compounding). Knowing both lets you understand exactly how much you’d pay if you carry a balance and makes it possible to compare offers. Other items like the credit limit, grace period specifics, or rewards program terms may be presented, but they aren’t the information that law requires up front to reveal the true cost of borrowing.

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