Credit Cards - Glossary of Terms |
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| Annual Fee |
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| A yearly fee the cardholder pays to have the credit card. Often billed to your card monthly. |
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| Annual Percentage Rate (APR) |
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| The yearly percentage rate the credit card issuer charges on the ongoing balance. This rate is applied to your outstanding balance each month. |
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| Balance Transfer |
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| Transferring the amount owed on one credit card to another credit card. |
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| Balance Transfer Fee |
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| A fee charged by a credit card issuer for balance transfers. It can be either a small percentage of the amount being transferred or a fixed dollar amount. Not all credit cards charge this fee. |
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| Billing Cycle |
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| The time between billing statements, usually 28-31 days. The start date of the billing cycle does not have to be the first day of the month. |
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| Cash Advance |
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| A cash advance is a cash withdrawn from an ATM or bank and charged to your credit card. There are usually higher interest rates and other fees associated with this type of transaction. |
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| Credit Limit |
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| The total amount of money that may be charged on a credit card. |
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| Finance Charge |
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| Interest costs and other fees associated with credit cards. |
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| Fixed Rate (Fixed APR) |
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| An annual percentage rate that does not change. It will usually last as long as the credit card is kept in good standings. (payments made on time, not exceeding the limit, etc.) |
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| Grace Period |
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| The time allowed to pay your credit card bill without being billed a finance charge and/or late fee. |
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| Introductory Rate (Intro APR) |
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| A lower interest rate lasting the duration of the introductory period. |
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| Minimum Payment |
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| The minimum amount of money that a cardholder is required to pay the credit card issuer each month. This amount is usually a percentage of the outstanding balance and will fluctuate as your balance goes up and down. |
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| Over the Limit Fee |
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| A fee charged when the balance exceeds the preset credit limit. |
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| Prime Rate (Prime Interest Rate) |
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| The best interest rate available. Offered to individuals with excellant credit. |
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| Secured Credit Cards |
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| Credit cards that require a cash deposit for approval. The credit limit will usually be equal to the cash deposit, however, some credit card issuers will set the limit in the amount of the cash deposit plus a percentage (ie: one and a half times your dposit - cash deposit = $500, credit limit = $750). Secured credit cards are for people with poor credit trying to reestablish. |
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| Unsecured Credit Cards |
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| Credit cards that are not secured by cash deposits. Customers qualify based on credit history, financial strength and current earnings. |
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| Variable Rate |
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| A variable rate is the prime rate plus an additional rate. The prime rate varies throughout the year, hence the name - variable rate. |
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