Credit Card Basics
Following are the terms , u will be seeing when u get a credit card offer. I just googled to findout the meanings of the "Credit Card Terms"
Following extract was made using the link : http://www.federalreserve.gov/Pubs/shop/
Annual Percentage Report ( APR ) :
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-- APR is the interest rate , we need to pay under the following circumstances :
1. If we carry over a balance , that is , we are not paying the full amount within the due date.
2. If we take out a cash advance.
3. If we transfer a balance from another card.
** Mostly APR for cash advance & balance transfer would be higher than the APR for Purchases.
** Fixed vs Variable APR :
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Fixed : APR doesn't change often.
Variable : APR varies periodically.Rate is usually tied to a prime rate. If the prime rate varies, our APR also varies.
Finance Charge :
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Comes into play only if we carry over the balance.
-- FC is the interest amount of the balance , that we carry over after one billing cycle.
-- Some companies have minimum FC, like 1$. If our Calculated FC(35 cents) is less than the Minimum FC , we need to pay the Minimum FC amount, as 1$.
Grace Period :
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This concept comes into picture only if we are paying the balance correctly within the prescribed due_date. Else there is no Grace period.
Grace Period : Normally they say as " 25 days from the statement date , provided your previous balance were paid in full amount within the due date".
Method of Computation of the balance for purchase : "Average Daily Balance" ,
APR will be applied to balance of the previous cycle , Plus APR will be applied for each & every new Purchases we make .
Fees :
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--- Annual Fees : Charged for having the card.
--- Cash Advance Fee : may be flat rate / % of the cash advance.
--- Balance Transfer Fee : Charged when you transfer the balance from one company card to another.
--- Late Payment Fee : Charged if our payment is after the due date.
*** doubt : Whether ( LPF + APR ) be added , if the balance passed the due_date.
--- Over-the-credit-limit-fee : Charged , if u use more than the credit limit.
--- Credit-limit-increase-fee : Charged if u ask them to increase the credit limit.
--- Setup fee : Charged when a new credit card account is opened .
--- Return item fee : Charged , if u pay ur balance thru' check & the check gets bounced.
Cash Advance Features :
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** Not only we can purchase using credit cards, we can also borrow cash in advance.
** Generally APR will be much more greater than the normal purchase using credit cards.
** Cash Advance Limit : depends on the credit card company. Read the offer document carefully.
Card types :
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1. Secured Credit Card : Requires Security Deposit.
2. Regular : Does not requires Deposit. with lesser features.
3. Premium : More features with more credit limit.
Card Lost :
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** Report as soon as possible . You don't need to pay more than 50$ for the charge made for te stolen card .
** Company will be canceling the card.
Hope this "kirukals on credits" finds useful.
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