Annual Percentage Rate (APR): A yearly rate of the cost of your credit transactions, including interest, prepaid finance charges and other finance charges. This rate is also expressed as a "periodic rate."
Average Daily Balance: A balance used to compute 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 interest due each month based on the outstanding balance at the end of the billing period.
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 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 use of 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 the interest charges on a daily basis. The factor is computed by dividing the yearly rate by 365 days. Used by a few card issuers, this method of computing interest can result in an effective annual percentage rate which is approximately 2% greater than yearly stated rate of interest.
Debit Card: A card which directly accesses the cardholder's checking account, providing payment for a transaction in like fashion to 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 Credit Card: A credit card providing above average benefits, including travel services, rental car insurance, and insurance for items purchased.
Grace Period: A period of 20 - 30 days during which interest is not charged for new purchases; available on most cards. This feature is usually available only to those cardholder who do not carry a cash advance balance from 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 - $25, but can be higher.
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% or a certain dollar amount such as $100.
Reward 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 which requires the cardholder to make a security deposit, frequently in the form of a savings deposit, to ensure payment of the outstanding balance should the cardholder default. Often required for those who lack credit or have had past credit problems.
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. Adjustments can made on a daily basis to an annual basis.