| Term |
Description |
| Annual Fee |
A fee charged every year by the credit card issuer for the right to posses and use the card. |
| Annual Percentage Rate (APR) |
The rate that interest is charge to the account for any unpaid balances expressed as an annual rate. A charge of
1% per month would be expressed as an APR of 12% |
| Balance Transfer |
The process of moving an outstanding balance from one credit card to another. This is usually done to obtain a lower
interest rate on the outstanding balance. Transfer are sometimes subjected to a Balance Transfer Fee. |
| Balance Transfer Fee |
A fee charged by the issuer of the credit card receiving a balance transfer. Usually 1% to 5% of the amount transferred
with a maximum charge of approximately $50. Not all issuers charge a balance transfer fee and most do not have a fee
for promotional transfers or for new customers. |
| Billing Cycle |
The time between the creation of your billing statements. Most billing cycles are monthly and bills will be mailed
the same date each month. If your statement due date is inconvenient, most issuers will adjust the date of the month
if requested. |
| Cash Advance |
A process of receiving cash or a check from your credit card issuer. The amount received is placed on your account
as a separate outstanding balance and is subject to interest charges. Many issuers charge a higher rate and a processing
fee for cash advances. Additionally, payments made are usually applied to reduce the outstanding balance of purchases
prior to cash advances. |
| Credit Limit |
The total amount of purchases and cash advances combined the may accrue on an account. Most issuers will adjust
a credit limit by phone. Some will adjust the limit automatically when the limit is exceeded with or without a fee.
Tip 1: Having very high, unused limits may effect your ability to obtain a loan. Unused available
balances are viewed as debt when applying for auto and home loans.
Tip 2: One way to reduce the risk of fraud is to have a spare credit card with a low credit limit
for Internet use only. This will reduce your exposure should the card information be compromised. |
| Finance Charge |
The amount of interest on your outstanding balances charged to your account. |
Fixed Rate
(or Fixed APR) |
Denotes that the interest rate will not change for a specified period of time. A distinction from an Introductory
Rate or a Variable Rate. |
| Grace Period |
A period of time from the end of the billing cycle that you can pay your balance in full without being subjected
to an interest charge. Most issuers only grant an interest free grace period if the pervious month balance was paid
in full. |
Introductory Rate
(or Intro APR) |
Denotes that the interest rate will change at the end of the introductory period. A distinction from a Fixed Rate
or a Variable Rate. |
Minimum Payment |
The least amount of money required as a monthly payment. The methods for calculating the minimum payment varies
and consists of any finance charges, fees, penalties plus a percentage of the outstanding balance. |
Over Limit Fee |
A fee imposed when the outstanding balance exceeds the Credit Limit. |
Prime Rate |
The interest rate at which banks will lend money to their best customers. As published in the Wall Street Journal,
it is used as the basis for most variable rate loans. |
Secured Credit Cards |
Credit cards that require a deposit of funds prior to use. Card usage reduces the positive balance. The most common
type is a Prepaid Debit card. |
Unsecured Credit Cards |
Credit cards that do not require a deposit of funds prior to use. Card usage increases the outstanding balance due.
These are the typical credit cards. |
Variable Rate
(or Variable APR) |
Denotes that the interest rate may change every billing cycle. Variable rate are based on the Prime Rate, as the
prime changes, so do the variable rates. A distinction from an Introductory Rate or a Fixed Rate. |
