Money Matters: Credit Card Mumbo-Jumbo
When you are inundated with cred card applications and try to read the fine print (like anyone really does, right?), do you even know what the terms used mean?
APR, Credit Line, Minimum Payment.
Some are obvious…others, not so much.
Here’s a list of common credit card terms and what they mean compiled by Practical Money Skills for Life:
The once-a-year cost of owning a credit card. Some credit card providers offer cards with no annual fees. The annual fee is part of the total cost of credit.
Annual Percentage Rate (APR)
The yearly interest rate charged on outstanding credit card balances.
An amount of money. In personal banking, balance refers to the amount of money in a savings or checking account. In credit, balance refers to an amount of money owed.
A reporting agency that collects information on consumer credit usage. There are currently three main credit bureaus in the United States: Equifax, Experian, and Trans Union.
The maximum dollar amount that can be charged on a specific credit card account.
A financial institution’s evaluation of an individual’s ability to manage debt. It is necessary to have a good credit rating if you intend to borrow money or have credit cards.
The time a borrower is allowed after a payment is due to make that payment without adding to the interest owed.
Credit card issuers may offer low introductory annual percentage rates as special promotions. Be sure to fully understand how long the introductory rate will last and what the standard rate will be.
The lowest amount of money that you are required to pay on your credit card statement each month in order to keep the account in good standing.
A banking service that allows you to link your checking account to your credit card, thereby protecting you from overdraft penalties or bounced checks in the case of insufficient funds.