How many times have you felt you had no idea of what credit card companies are offering or the difference between their products? Are credit card terms difficult for you to fully understand? You are not alone. Hundreds of North Americans make bad credit card choices everyday because of the lack of terminology knowledge. They get stuck with high interest rate credit cards, or with credit cards which charge extremely high finance fees.Credit card companies are favoured by this situation and their customers end up paying much more than necessary. This article will discuss the most common and most useful credit card terms, it seeks to become an easy-to-read guide for both credit card holders and those who are about to apply for one of these fantastic and versatile financial products. It Is All About The Credit Card Rate…Rates are very important when shopping around for a credit card. You should take into account rates when comparing credit cards on the market. Annual Percentage Rate (also APR): this is the interest rate expressed as a yearly rate. Introductory Rate (also Intro Rate): some financial institutions offer this rate for a limited period of time as an incentive for potential customers. It is considerably lower than the normal interest rate, but card holders should bear in mind that the regular interest rate will apply after this limited period of intro rate use is over. Some credit cards also have cash advance APRs, balance transfer APRs or delayed APRs. Fees And ChargesNot all credit card companies charge these fees, some charge a few of them, some charge all of them. It is basic to check which fees you would be charged before deciding which credit card is the right one for you. Annual Fee: this is a yearly fee, as the name very well indicates, and many issuers (banks, credit unions or financial institution) charge it to cardholders for the privilege of having the card. This fee is independent from the interest rate and it can go from $5.00 to $300.00. Balance-Transfer Fee: fee charged when the balances of your other credit cards are consolidated. Cash Advance Fee: this fee applies when you ask for an advance in cash. It can be a fixed dollar amount or a percentage associated to the advance taken. Credit-limit-increase fee: if you decide to increase the limit on your credit card, this fee may apply. Late-payment fee: this fee is associated to the late payment of your bill. Over-the-credit-limit fee: you may be charged this fee if you go over your credit limit or credit line. Some financial institutions charge other fees, but the above ones are the most common ones. Other Credit Card FeaturesOther things to take into consideration are for example the credit limit of your plastic card, which will restrict your monthly spending. You will most certainly have to pay a finance charge for each purchase you make, which is a charge for the privilege of using credit. Credit cards are a great way to save money and several credit card companies offer incentives for credit card holders. These special features may include rebates, frequent flier miles, credit card insurance, etc. Knowledge is power, make sure you know everything there is to know about credit cards before applying for one.
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