Annual Percentage Rate (APR)
A yearly rate which expresses the dollar amount you pay to use credit, including interest and other charges.
Average Daily Balance
A method of charging interest on a daily basis. The balance used is the average amount you owe during each day of the billing period. The daily balance includes the current outstanding balance plus any new charges and minus any payments or credits. This method is used by most card issuers and results in lower charges when compared to calculating interest on the outstanding balance at the end of the billing period.
Balance Calculation Method
The method used by a credit card issuer to calculate the balance owed and the interest due each month.
Balance Transfer Program
A program offered by card issuers to entice cardholders to utilize the card issuer's credit card to pay-off other credit cards, effectively transferring the balance of their existing cards to the new card. Transfers of the balance owed may occur through the use of special checks, or may be handled directly by the issuer on your behalf.
Cash Advance Fee
A charge for obtaining cash by charging the amount desired to your card. Fees usually vary from 2 - 5% of the amount advanced.
Credit Limit
The maximum amount of charges you may incur on your card.
Daily Periodic Rate
The interest rate factor used to calculate interest charges on a daily basis. The factor is computed by dividing the yearly rate by 365 days. Used by the Discover card, but few other cards, this method of computing interest can result in an effective annual percentage rate which is approximately 2% greater than the yearly stated rate of interest.
Debit Card
A card which directly accesses the cardholder's account, providing payment for a transaction much like writing a check. No credit is extended to the cardholder. No debt is incurred.
Finance Charge
The charge for the use of credit, consisting mainly of interest costs, but also including other fees such as cash advance fees.
Fixed Interest Rate
An interest rate that changes only if the issuer notifies cardholders through an amended cardholder agreement. Federal law stipulates a minimum of 15 days advance notice is required.
Gold Card
A credit card providing above average benefits, including travel services, rental car insurance, and insurance for items purchased. Please see Gold Cards for further information.
Grace Period
A period of 20 - 30 days during which interest is not charged for new purchases. Many card issuers offer such a program. However, this feature is usually available only to those cardholder who do not carry a balance from the prior month but have paid the full amount due in the prior month.
Late Payment Fee
A fee charged for failing to submit the minimum monthly payment by its due date. The amount of the fee is usually $10 - $20.
Minimum Payment Due
The smallest amount which you may pay and maintain a current account. Minimum payments are usually 2 - 10% of the amount owed.
Monthly Periodic Rate
The most common interest rate factor used to calculate the interest charges on a monthly basis. The factor is computed by dividing the yearly rate by 12.
Over-Limit Fee
A fee charged for exceeding your credit limit. The fee is frequently $10 - $20, and may not be assessed unless the credit limit is exceeded by 10%.
Rebate Card
A credit card which supplies benefits based upon the card's usage. Benefits are usually in the form of services, such as airline tickets, discounts on future purchases, or cash refunds and are based upon a percentage of the purchase amounts charged.
Secured Card
A credit card for which the cardholder has made a security deposit, frequently in the form a savings deposit, to ensure payment of the outstanding balance should the cardholder default. Designed for those who lack credit, or have damaged credit.
Tiered Interest Rate
A method of computing interest in which the rate is based upon 1) the amount of the outstanding balance, 2) the amount of cumulative charges made, or 3) the cardholder's credit and risk rating.
Variable Interest Rate
An interest rate that automatically adjusts due to fluctuations in an economic index, usually the prime rate of interest. Other indexes include the 26 week Treasury Bill Rate, the Federal Funds Rate, or Discount Rate, and Libor. Adjustments are usually made on a quarterly basis.
|
