Credit Card Terms You Should Know

Here are the key terms to look for when reading and understanding your credit card agreement.  It is a good idea to keep this nearby to help answer any questions you might have concerning your credit cards and their use.

Post Date:  The date upon which your credit card account has one of the following transactions applied: purchase, cash advance, fee, service charge or payment.

Total Credit Line:  Your maximum balance which you are allowed to carry on your credit card.

Statement Closing Date:  You are billing cycle ends on this date. Also on this date the interest is calculated on your balance and your statement is generated.

Available Credit Line:  The dollar amount of unused credit that is available to you. This is computed by taking your total credit line and subtracting your balance.

Amount Over Credit Limit:  The amount of money that you owe which exceeds your credit line. It’s important to note that any combination of purchases, cash advances, fees or finance charges may cause your credit line to be exceeded. Exceeding your credit limit will cause you to be charged an extra fee each month.

Cash Advance Limit:  You are limited in the amount of cash that you can withdrawal from your credit card amount by this maximum.

Past Due:  When the minimum payment has not been received by the due date, this becomes the status of that account.

Available Cash Limit:  Your cash advance limit is this amount of cash that you can withdraw from your account.

Purchase/Advance Minimum Due:  This is the lowest amount that you can pay on your purchases and cash advances by the payment due date and still remain under the terms of your card agreement. 

New Balance:  This is the amount of money that you owe the card issuer. It includes any unpaid balance from a previous month plus new purchases, any cash advances or other charges such as your annual fee or late fees.

Minimum Amount Due:  This is the lowest amount you can pay by the due date and still remain under the terms of your card agreement.

Previous Balance:  This is the total balance due as of the end of the previous billing cycle.

Finance Charge:  This is the actual cost of consumer credit. This includes any charges including interest and fees paid by the cardholder to the credit card company for obtaining the card.

Periodic Rate:  This is the interest rate applied to a pre-determined amount of time. The cost of credit per month is the monthly periodic rate in the cost of credit per day is a daily periodic rate.

Annual Percentage Rate or APR:  This is the interest rate you pay on your balances and is calculated on a yearly basis. The APR is the first indicator of what credit costs when carrying a balance on your card.

Payment Due Date:  This is the day that your payment is due to the creditor. If payment is not received on that date and possibly a time on that date, a late fee to be charged and any subsequent payment will be considered late. Also this would change the account status to delinquent.

Total Balance:  This is the total amount of money that you owe the credit card issuer. The items included here are any unpaid balance from the previous month, new purchases, cash advances, and any other charges like an annual fee, late fee or finance charge.

Understanding what all of the credit card terms mean is extremely important for any cardholder.  Just simply understanding the terms and their affect on your account can help you avoid some pretty serious financial trouble.

“Knowledge is power.” – Francis Bacon

 

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This entry was posted on Wednesday, March 4th, 2009 at 9:56 am and is filed under Credit Card News, Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.