The fine print
Understanding the
terms and conditions of your
credit card is important in order to maintain your financial health. The
terms and conditions will vary depending on your credit card issuer, but we'll
explain basic terms and conditions in this section. You also can call your credit
card issuer
if you have any questions about your terms and conditions.
Annual percentage rate
The
annual percentage rate varies by credit card. Many card issuers will offer
introductory offers as low as 0% for a limited time, but you could jeopardize
that offer if your payment is ever
late or your account goes over your
credit limit. Remember that rates that are "too good to be true" usually expire
after a short time and much higher rates then go into effect.
Grace period for purchases
The grace period varies from 20 days to 25 days depending on the card issuer.
The finance charge applies after the grace period ends if the balance isn't paid
in full.
Annual fee
Many card issuers do not charge an
annual fee, but it's always a good idea to see if the card issuer does before
you accept the credit card offer.
Minimum finance charge
If you carry a balance on your credit card, you will accrue a finance
charge. Depending on the interest
rate and your credit card company's policy, you will be charged a certain
percentage of the outstanding
balance (and sometimes a percentage for any new purchases as well).
In the case of a very small balance,
a minimum finance charge will be billed to you instead of the actual interest
rate. In other words, if you had a balance of $5 on your credit card and the
finance charge is 4% of your total balance, you will not be charged $ .20, you
will be charged a minimum of $ .50. The minimum finance charge for most credit
card companies is somewhere between a total of $.50 - $1.
Always investigate your card's minimum finance charge because it can add to
your monthly balance. Please read your service agreement for details.
Transaction fee for cash advances
You'll want to keep your cash advances to a minimum because several additional
fees can be attached to this transaction, such as teller fees and transaction
fees up to 3%. In most cases a grace period will not apply to the transaction.
Over limit fee
Having your credit card balance over the limit
can cause problems too. Card issuers can charge you up to $29 every time your
card is over the limit, and sometimes paying only the minimum balance will not
put you back under your credit limit. Avoid spending to your credit limit on any
account. Not only do you risk over limit charges, but using all (and more) of
your available credit is viewed negatively by lenders.
This article is provided for general guidance and information. It is not intended
as, nor should it be construed to be, legal, financial or other professional
advice. Please consult with your attorney or financial advisor to discuss any
legal or financial issues involved with credit decisions.
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