Understand Credit Terms

Annual Percentage Rate - APR - Is the measure of the cost of credit as a yearly rate. Many cards have a variable APR. This means the rate may change and the card issuer must let you know how the rate is determined.

Grace Period - This lets you avoid finance charges by paying your bill in full before the due date.

Annual Fee - Some card issuers charge a yearly fee just for having their card. Sometimes the fee will be waived if you make a certain amount of purchases.

Transaction Fees - Many credit card issuers will charge a fee if you use the card to get a cash advance, make a late payment or go over your credit limit.

Balance Computation Method for Finance Charge

Average Daily Balance is the most common method used. The total of each balance in the billing period minus any payments made is divided by the number of days in the billing period. The total is the average daily balance.

Adjusted Balance - This is the best deal for card holders. The balance is determind by subtracting payments received during the current billing period from the balance at the end of the previous billing cycle. Purchases made during the billing period aren't included. This means you have until the end of the billing cycle to pay part of your balance and avoid finance charges.

Delinquency Rates - Many cards will appy a very high APR if you are late on your payments. In addition you will be charged a late fee.

Unauthorized Charges - If your card is used without your permission you can only be held responsible for $50.00 per card. If you report the loss of your card before it is used you can't be held liable for unauthorized charges.