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Common Credit Card Terms and What They Mean

When shopping around for a credit card, it is very important to understand the terms and fees that each card offers in order to make an informed decision regarding the best credit card for you. Because these terms affect your overall cost, it is important to compare the terms and fees of various cards before opening an account.

Annual Fees

These are the annual membership fees, or participation fees charged by some card issuers. They can range from $25 up to several hundred dollars.

Annual Percentage Rate (APR)

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

Balance Transfer

This is the process 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 incentives to the card holder. These offers usually mean you will receive some percentage of the total 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 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 does not offer a grace period, then you may be paying finance charges from the date the card is used.

Introductory Rate

Credit cards often offer special "introductory rates" to new card holders. These rates may be as low as 0% for a specified period of time. After the introductory period ends, the annual percentage rate will increase to the cards regular ongoing rate. It is important to know what this rate is as well as how long the introductory period lasts prior to applying for one of these cards.

Transaction fees

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

About the author:

Karyn Kudrna is owner of websites that offer information on low interest credit cards and credit cards for bad credit and payday loans