Annual Fee: A yearly fee to own or use a credit card.
AnnualPercentage Rate (APR): The yearly percentage rate charged when a balance is shown on a credit card. This rate is applied to your
outstanding balance each month.
Balance Transfer: The moving of an existing balance from one credit card to another credit card,usually done to obtain a lower annual percentage rate (APR) and, in turn, save charges.
Balance Transfer Fee: A once-only fee charged by the credit card company to transfer a balance from another card account to that particular credit card account. This charge can be anything from 1% to 5% of the transferred balance (often up to a certain maximum dollar value).
For example, a typical balance transfer fee could be 2 or 3% of the transferred balance up to a maximum charge of $50. Not all credit cards will charge this fee.
Billing Cycle: The time between each billing statement, typically 28-31 Days.
Cash Advance: A cash advance is a cash loan obtained from your credit card account, usually through a bank or an ATM. This type
of transaction can often be much more costly than typical purchases, as the interest rate is usually higher and there may be other fees applicable.
Credit Limit: This is the total amount of money that may be charged to or held as a balance (or a combination thereof) on a particular credit card account.
Credit Report: A report of an individual’s credit history that is usually used to determine the individual’s creditworthiness.
Debt Consolidation: The act of replacing (consolidating) several different loans (debts) with just one.
Finance Charge: This is a combination of interest charges and other transaction fees (i.e. balance transfer fees, cash advance fees, late fees, overlimit fees) that occur ;during the use of a credit card.
Fixed Rate (or Fixed APR): A fixed APR does not change but rather stays the same for a specified period of time. This differs from a credit card with an “intro APR.” in that an intro APR is a temporary low APR that moves to a higher rate after the introductory period has ;expired (typically 3-12 months).
Grace Period: This is the time allowed to pay your credit card bill without being billed a finance charge and/or late fee. It is usually 10-28 days.
Introductory Rate (or Intro APR): A temporary, lower annual percentage rate that will typically last from 3 to 12 months. After the introductory period has expired, the APR generally rises.
Minimum Payment: The minimum payment that a cardholder is required to pay the credit card issuer each month. This amount is generally based on the outstanding balance on the cardholder’s account. A cardholder can always choose to pay more than the minimum payment, and paying the entire balance in full is advised in order to avoid finance charges.
Overlimit Fee: A fee charged when the cardholder’s balance exceeds his/her credit limit.
Prime Rate (or Prime Interest Rate): The interest rate at which banks lend to their most creditworthy customers. The prime rate can change although not on a regular basis.
Secured Credit Cards: These are credit cards that require collateral for approval. With secured credit cards, a security deposit is needed to secure the balance on the credit card. The amount of the security deposit usually equals the credit limit for that particular credit card. Generally, secured credit cards are for individuals with no credit or poor credit who are trying to build or rebuild their credit history.
Unsecured Credit Cards: These are credit cards that are not secured by any collateral. Customers will qualify based on their credit history, financial strength and earnings potential.
Variable Rate: Variable Rate is the opposite of a fixed rate. It is generally Prime Rate + an additional rate. As an example, if the rate of a credit card is “Prime rate + 4%,” and the current prime rate is 10%, the APR would be 14%. The prime rate will vary throughout he year.