Credit cards are great for convenience or when you’re in a short-term financial pinch.
Before you get too deep in credit card debt, you need to make sure that you know the card terms for the credit card you’re using. Not all cards are the same so don’t assume that they are.
Continue reading this article to learn about important terms that you should know about your card.
Must-Know Card Terms
Understanding credit cards is a necessity if you want to keep from overpaying for the money you use. The following are a great start for your research.
1. Annual Fee
Some credit cards have an annual charge for simply having the card open. Even if you don’t spend one dollar, you’ll have to pay the fee. Some of these annual fees are only $15 while others can go up to $500.
Before you sign on the dotted line, make sure you know if you’re going to be charged an annual fee and whether it is worth it to you.
2. APR or Annual Percentage Rate
Your APR is how much you’re going to pay in interest in a given year. This includes all fees and other costs that are paid to get the loan.
Find a card that has as many of the features that you want as possible but with the lowest APR as possible.
Your credit card is likely to have different APRs for purchases, balance transfers, and cash advances. Cash advances usually cost you the most money.
If the APR of your card is too high and your credit too low, you may have too consider getting no credit check loans just to pay off the balance.
3. Finance Charge
Your finance charge is the cost to use the card. The finance charge includes interest and any other costs for using the card.
4. Credit Limit
Your credit limit is how much you’re allowed to charge on your card. If your credit limit is $500 and you try to spend $550, most cards will decline the purchase. Some other cards don’t decline the purchase but instead, charge a fee for going over your credit limit.
Make sure you know what your credit limit is and stay below it so you don’t have any problems.
5. Grace Period
If you want to save money by avoiding paying interest, you need to know what your grace period is. The grace period is the time the lender allows your loan to go interest-free from the time that you use the money and the billing date.
Most grace periods are 20 to 30 days but make sure to check your specific cards.
What Are the Best Credit Cards of This Year?
Now that you know more about card terms, you’ll be able to make a more informed decision about which cards to use.
If you’re still confused about which cards you should choose — no worries. We’ve compiled a list of the top cards so you can check them all out here. Continue your educational journey through our blog.
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9 Things You Should Know Before Taking Out Credit Card Insurance