4) Balance Transfer
Balance transfer is the process of moving
unpaid credit card debt owed from one issuing company
to another issuing company. Credit card issuers sometimes
offer very low interest rates to encourage people to transfer
their debt balances owed to their company. Many card issuers
also have balance transfer-out fees that discourage people
from moving their balances from one issuer to another.
5) Cash Advance Fee
When you withdraw money from the ATM
using your credit card, your bank will charge you a Cash
Advance fee. This fee is usually a % of the cash advance
amount you withdraw from the ATM. For instance, the fee
may be expressed as "2%/$12" This
means you will be charged 2% of the cash amount you withdraw,
or $12, whichever is higher.
6) Credit Limit
This is the total maximum amount of
money you can borrow from your credit card, at any given
point in time.
7) Finance Charges
There are different finance charges
for any balance-transfers, cash advances and regular usage
of credit. Make sure you read the fine print of your credit
card agreement or ask your issuer of the exact finance
charges you will have to pay on any of these above items.
8) Grace Period
Grace period is the interest-free period
for a borrower between the time he makes a transaction
and till billing time. Grace period usually lasts 20-30
days within which you won't get charged interest. If your
issuer has no grace period, your interest payments begin
the day you use your credit card for any purchases.
9) Introductory Rate
Introductory interest rate is a teaser
low interest rate that lenders use to encourage new customers
to transfer their balances to their company or switch
their card issuers. Make sure you do not get carried away
with the introductory interest rates, but ask for the
actual APR you will be paying.
If you get a mail saying you've been
pre-approved for a $14000 credit card or something, know
that pre-approval only means you've passed a preliminary
credit screening test. Your card issuer can still decline
your application if your credit score is too low (you
are not a good risk for lending money to).
11) Secured Credit Cards
Secured credit cards are types of credit
cards that are bonded with your savings deposit accounts.
If the borrower defaults on the monthly debt payments
required on the card, the issuer can withdraw the balance
from the attached savings deposit account. Secured cards
is used by people trying to rebuild their credit or new
12) Universal Default
This is a universal interest rate that
all card issuers can impose on borrowers if they are 30
days or more late for payment. For example, if you owe
$500 in credit card debt and have made no payments for
30 days or more, the issuer can skyrocket your interest
rate to 20-35%. Read the fine print of your credit card
agreement, it will say whether your issuer has the right
of Universal Default or not.