Finance Literacy:Commonly Used Credit Card Terms

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Credit Card Terms

Annual Fee:

 

Fee charged by the credit card company to the credit card hold once a year.

Some credit card companies do not charge annual fees.

 

Balance:

 

This is what is owed on the credit card

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Credit Card Terms

Annual Percentage Rate (APR):

It's the cost of borrowing calculated per year.

Example:

3% interest is charged monthly

Therefore:

3% x 12 months = 36% annually

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Credit Card Terms Cont....

Cash Advance:

Withdrawing cash against the line of credit on your card.

Always has a higher interest rate and no grace period.

Finance Charge:

Is a fee for the use of credit. It's usually a percentage of the borrowed amount.

This is how the lender makes a profit.

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Credit Card Terms Cont....

Grace Period:

Is the time between a charge is made and the finance charge is added to the balance.

Usually 20-25 days.

Line of Credit: 

Is the credit amount available to you on the card. 

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Credit Card Terms Cont....

Transaction Fee:

Fees incurred for certain transactions

1. cash advance

2. over-limit charges

3. late payment

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Credit Card Terms Cont....

Arbitration:

This is where parties agree to resolve any disputes outside of court.

This is a settlement method where all parties involved are bound by the decision of the arbitrator.