Credit Card Terms
Important terms of use must be generally disclosed in any credit card application and that even in solicitations not need an application. Here are the most important terms to understand - or ask about - when you are choosing among offers of credit.
Fees. Many credit cards charge membership and / or participation fees. Issuers have a variety of names for these fees, including “annual”, “activation”, “acceptance”, “participation” and “monthly maintenance fees. These may appear monthly fees, periodically, or as one-time charges, and can range from $ 150 to $ 6 What’s more, they can have an immediate effect on your credit available. For example, a card with a credit limit $ 250 and $ 150 in costs leaves you with $ 100 in credit available.
Transaction Fees and Other Charges. Some issuers charge a fee if you use the card to get a cash advance or make a late payment, or if you exceed your credit limit.
Annual Percentage Rate. The APR is a measure of the cost of credit, expressed as a yearly rate. It must be disclosed before your account can be activated, and it must appear on your account statements.
The card issuer must disclose the periodic rate. “That’s the rate the issuer applies to your outstanding balance to determine the finance charge for each billing period.
Some credit card issuer plans let the APR change when the interest rates or other economic indicators - called indexes - change. Because the rate change is linked to the index’s performance and varies, these plans are called “variable rate” programs. Rate changes can also raise or lower the finance charge on your account. If you are considering a variable rate card, the issuer must tell you that may change the rate and how the rate is determined.
Before your account is activated, you must also be given any information about limits on how much your rate may change - and how often.
Grace Period. A grace period, also called a “free period” lets you avoid finance charges if you pay your balance in full before the date it is due. Knowing whether a card gives you a grace period is important if you plan to pay your account in full each month. Without a grace period, the card issuer may impose a finance charge from the date you use your card or from the date each transaction is posted to your account.
Balance Computation Method for the finance charge. If you do not have a grace period - or if you plan to pay for your purchases over time - it’s important to know how the issuer calculates your finance charge. Which balance computation method is used can make a big difference in how much of a finance charge you’ll pay - even if the APR buying patterns and your stay pretty much the same.
Transfer Offers balance. Many credit card companies offer incentives for balance transfers - moving your debt from one credit card (card Issuer A) to another (Card Issuer B). All offers are not the same, and their terms can be complicated.
For example, many credit card issuers offer transfers with low introductory rates. Some issuers also charge balance transfer fee. If Card Issuer B charges transfer to four percent from $ 5,000 Card Issuer A, your fee would be $ 200 In addition, if you pay late or fail to pay off your balance transferred before the introductory period ends, B Card Issuer may raise the introductory rate and / or interest you charge retroactively. And if you use your card from Card Issuer B to make new purchases, you make any payments will go toward your balance with the lowest interest rate - and finance charges at the higher interest rate will be assessed on the portion of your balance that came from New purchases.