Credit Card Terms To Know

APR. For credit cards, the APR is the cost of credit expressed as a yearly interest rate.
Annual fee. A yearly fee that may be charged for having a credit card. Some card issuers assess the fee in monthly installments. Some cards do not have an annual fee.
Balance. The amount owed on the account, including the charges, interest, and fees owed.
Balance transfer fee. A fee charged when you make a balance transfer. It may be a flat fee or a percentage of the transfer. Some cards will charge 0 percent interest on balance transfers, but that doesn’t mean the transfer is free.
Credit limit. The maximum amount that may be borrowed on a credit card. Some credit card advertisements offer a credit limit “up to” a certain amount – but you may not qualify for the maximum. Maxing out a card with a low credit limit can hurt your credit score, which could make it more difficult and
more expensive to borrow in the future.
“Go-to” rate. Interest rate you are charged after the introductory rate.
Grace period. The number of days you have to pay your bill in full before an interest charge is assessed on purchases.
Introductory or promotional APR. Your card may have a lower APR during an introductory or promotional period and a higher rate after that period ends. Under Federal law, the introductory period must last at least six months, and the credit card company must tell you what your rate will be after the introductory period expires. Penalty APR The APR charged on new transactions if you trigger the penalty terms in your credit card contract. Your credit card issuer may consider you in default if you pay late, go over your credit limit, or if your check is returned. Penalty rates usually are higher than your standard or introductory rates. If you become more than 60 days late, the penalty APR may be applied to your existing balance.
Penalty fees. Fees charged if you violate the terms of your cardholder agreement or other requirements related to your account. For example, your credit card
company may charge a penalty fee if you make a late payment or if you exceed your credit limit.

Source: Consumer Financial Protection Bureau:

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