Wednesday, February 11, 2009

Common Credit Card Terms and Their Meanings

When shopping around for a credit card, it is very of import to understand the terms and fees that each card offers in order to do an informed determination regarding the best credit card for you. Because these terms impact your overall cost, it is of import to compare the terms and fees of assorted cards before gap an account.

Annual Fees

These are the annual rank fees, or engagement fees charged by some card issuers. They can range from $25 up to respective hundred dollars.

Annual Percentage Rate (APR)

The annual percentage rate, or APR is the cost of credit as a annual rate. By law, this rate must be disclosed to all appliers of a credit card. This rate is often variable, meaning that it can be raised or lowered depending upon the public presentation of the index, or econonmic indicator, that it is linked to.

Balance Transfer

This is the procedure of transfering an unpaid credit card balance from one card to another. Often the card receiving the balance will charge the card holder a balance transfer fee.

Cash Back

Some credit cards offer cash back inducements to the card holder. These offers usually intend you will have some percentage of the sum amount charged to the card monthly, quarterly, or annually. This percentage may be paid to you by check or may be reflected on your account as a credit.

Grace Period

This is the clip period of time offered by some cards that allows the card holder to pay the balance in full without accruing any interest charges. If your card makes not offer a saving grace period, then you may be paying finance charges from the day of the month the card is used.

Introductory Rate

Credit cards often offer particular "introductory rates" to new card holders. These rates may be as low as 0% for a specified clip period of time. After the introductory time period ends, the annual percentage rate will increase to the cards regular in progress rate. It is of import to cognize what this rate is as well as how long the introductory time period endures prior to applying for one of these cards.

Transaction fees

Some credit cards will charge further fees for transactions such as as cash advances or balance transfers. Late fees may also be applied when a payment is received after the owed date.

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