Credit Card Terms

A credit card is a borrowing method that usually involves charges. Credit terms and conditions are the reason behind how repayment is made, so it is wise to compare different terms and fees before any agreements or signatures are taken place.

Here are some important terms to consider. These should be in all credit card applications:

"Annual Percentage Rate" is a measure of the credit cost, expressed as an annual rate. It also must be agreed before you make final obligations on the account and on the statements.

The credit card issuer must also disuss the periodic rate. This is the rate applied to your outstanding balance so that to calculate the extra charge for the corresponding billing period.

A free period means you will avoid finance charges by paying your full outstanding balance before the date due. Without a free period, the card issuer can impose an additional charge from the start date of using your card or from the date that each transaction has been made on your account.

Almost all card issuers charge an "Annual Fee", although some cards now overlook this charge if you spend above a certain agreed amount.

Some issuers charge some sort of a fee if you use the card to withdraw cash, repay later than agreed, or exceed the credit limit. Some, also charge a monthly fee even if you do not use the card at all.

Ask your card issuer if you do not understand how your balance has been calculated. Your billing statement should also show this explanation.