Credit Card Lowdown: Credit Card Terms

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Credit Card Terms

Credit card issuing companies use various jargons which, if not understood properly can put you in confusion. The commonly used jargons are, Average Daily Balance, it is calculated by adding each day’s balance and dividing the total by total numbers of days in the billing cycle. This is multiplied by the credit cards monthly periodic rate. This method is used to calculate your payment due. The next one is APR, annual percentage rate which is the interest which includes fees and cost paid to get the loan. Balance transfer is the term commonly used. It means the act of transferring unpaid credit card debt from one issuer to another credit card issuer. Cash advance fees, is nothing but fee charged for obtaining cash through credit card. Floor is the minimum rate on a line of credit after the introductory rate period. Grace period is the interest free time between the transaction and the billing date. Minimum payment is the minimum amount which you need to pay for the account to avoid going into default. There is a fee charged for going over the credit card limit, which is known as over the limit fee. Variable interest rate is the % you pay for using the money, the rate keeps on changing depending on the other interest rates. Creditlovers.com Reports:

The card holder agreement is the written statement that displays the terms and conditions of the credit card account. This agreement is required by the Federal Reserve regulations. By law, the card holder agreement must include the Annual Percentage Rate (APR), annual fee if applicable, the monthly minimum payment formula, and the customers rights when disputing billing matters.

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September 6, 2005 in Tips & Advice | Permalink