Don't let yourself become overwhelmed by all the terms and definitions associated with your credit card.
There are so many terms and definitions refering to credit cards that it is easy to become confused or overwhelmed.
Has this happened to you? Don't feel ashamed- many others beside yourself feel the same way.
The following is a concise list of all the credit card terms that you should know in order to understand and be in full control of your credit:
Annual fee: A fee for use of a credit card charged by a bank each year, which can range from $0 to over $50, billed directly to the customer's monthly statement. Many credit cards come without an annual fee.
Annual percentage rate (APR):The amount of interest you pay on the balance of your credit card in one year?s time. Lenders are required by law to disclose the APR, which allows potential borrowers and card holders to compare rates. If you?re credit card has an APR of 15% and you keep a consistent balance of $1,000 on your credit card, you pay ? over the course of one year ? $150 in interest.
ATM: Automated Teller Machine. It's a terminal activated by a magnetically encoded card that allows customers of a bank or other financial institutions to conduct certain transactions such as deposits and withdrawals. The network of these terminals allows customers to conduct many transactions around the world, usually subject to a surcharge fee.
ATM access fee: Fee charged in addition to the individual account fees for an account holder to gain access to the ATM system. Can be monthly, weekly, or annual fee.
Balance transfer rate: Interest rate charged by banks for the outside balances that a card holder wants to place on another card. Card issuers sometimes offer low introduction rates to encourage balance transfers coming in and balance transfer fees to discourage them from going out. Most consumers transfer high interest credit card balances to a new credit card and reap the benefits of a lower APR. A balance transfer can lower the amount owed each month, thus saving you cash.
Billing cycle: The number of days between the last statement date and the current statement date.
Cash advance rate: An interest rate charged by the bank for using credit cards to obtain cash. This rate can be stated in terms of a percentage of the amount of the cash advance or as a flat per-transaction fee. The interest rate on a cash advance is usually higher than a credit card purchase interest rate because there generally is no grace period. Interest accrues from the moment the money is withdrawn.
Credit card A plastic card with a coded magnetic stripe that entitles the card owner to a revolving line of credit, with a credit limit and interest rate determined by the card holder's income and credit report. Credit cards began in the late '40s when banks began distributing certificates that could be used like cash in certain stores. The first real credit card was issued in 1951 by Franklin National Bank in New York.
Credit limit: The maximum amount of charges a cardholder may apply to the account.
Default: The condition that occurs when a consumer fails to satisfy the obligations set out in a loan or lease.
Finance Charges: These are fees that a bank may charge a card holder for any of the following transactions: Foreign currency exchange, Cash Advance, Balance transfers
Fixed Interest Rate: This interest rate is always one set percentage charged by a bank for credit card purchases. For example, the 15% APR stated above. However, many cards have clauses that state they may change your fixed rate if you are late with a payment or if you bounce a check. You may want to look over that fine print again.
Grace period: If the credit card holder carries a zero balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, interest charges will take effect the moment a purchase is made with the credit card.
Interest rate: The amount, or percentage ,charged per year on a credit card. There are different types of interest rates applying to different cards or card holders.
Introductory (or intro) interest rate: The low rate charged by a lender for the beginning period that a consumer has a card. Introductory rates usually last around 6 months and are used to entice borrowers to accept the credit terms.
LIBOR Rate: LIBOR stands for London Inter Bank Offer Rate. It's the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London. It is a standard financial index used to determine interest rates and U.S. capital market rates.
Tiered interest rate: An interest rate that may change with your balance. Usually the interest rate increases as your balance increases. I may pay a 15% APR as long as my balance is under $1,500 ? but when I hit $1,501 the rate may change to 16%. Again, check the fine print or call your credit card company?s customer service department.
Variable interest rate: Percentage a borrower pays for the use of money, usually expressed as an annual percentage, which may fluctuate in tandem with a rate index. This interest rate may move at any given time, unlike fixed interest rates. This interest rate fluctuates along with one of the Federal Indexes. The rate is usually a specific multiple of ?the prime rate; the one-, three- or six-month Treasury bill rates; the federal funds rate; [or] the Federal Reserve discount rate.? It is especially important to be aware of changes in the financial index that influences your variable interest rate.
Zero balance: This figure shows on a credit card customer's bill when the outstanding balance has been paid and no new charges have been incurred during the billing cycle.
*See the online credit card application for details about terms and conditions of offer. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Here" button you can review the credit card terms and conditions on 's web site.