More Credit Card Terminology and Explanations
Learn About More Terms Associated with Using Credit Cards
Nov 11, 2009
The credit card companies are consistently coming up with new words to throw at their consumers. These terms all have definitions that effect the contractual agreement between themselves and the credit card holder. Here is a look at some commonly found credit card terms.
Balance Transfer Fee
This is a fee associated with moving money from one credit card to another. A consumer will typically look to move a balance from a higher interest rate credit card to a lower interest rate credit card. Be sure to read the terms of the Balance Transfer Fee as the industry standard is now 3%. That means one must decipher if taking a 3% surcharge is worth moving a balance.
Minimum Finance Charge
The minimum finance charge is a base amount of money that a credit card company will charge the consumer if they carry a balance. This means if the consumer has a low balance, such as $10 or $20 with a low interest rate, they will charge at least 50 cents or a dollar to the card holder for that billing cycle.
Promotional Period
The promotional period refers to the length of time that a credit card company keeps an interest rate low, before raising it to the standard APR (annual percentage rate.) For instance a credit card company may offer "interest free" for six months and then after that period, adjust the APR to the standard rate of 12% (for arguments sake.) This means that any purchases that the consumer made that are still on that credit card during the 7th billing cycle (in this example) would start to accrue interest.
Grace Period
A Grace Period is a set amount of time that the credit card company allows the consumer to be late on their payment without a payment or interest penalty. A grace period is usually found with credit union credit card accounts.
Automatic Payment
An automatic payment is a payment that is made from the credit card customers bank account to the credit card company. This payment is made on a consistent basis so that the card holder never misses a payment and suffers the consequence of a penalty. The automatic payments can be as little as the minimum payment amount to the entire balance of the monthly bill.
More Terms
For more terms associated with credit cards and understanding the terms and conditions associated with a credit card agreement, check out this article on Basic Credit Card Terms.
 |
