There are far too many confusing credit card terms for the average consumer to keep track of. But to stay on top of one's finances, it is completely necessary to familiarize one's self with the terms. Doing so will enable consumers to enjoy a long lasting and successful credit history.
A common term is the annual percentage rate, or commonly abbreviated as APR. This is simply the interest rate that is paid by consumers in addition to the cost of the items or services they purchased. The lowest percentage rate, or APR, is the best in this case, as consumers won't have to pay as much interest.
Associated with the APR is the finance charge. A finance charge is the total owed by the credit card owner, including the interest rate and the price of the purchases on the account. To get the finance charge, credit card companies apply the interest rate to the total amount owned and get the final result that must be paid by the card holder.
For those who don't qualify for most credit cards, there are still options in buying on credit. A secured card can be obtained that is linked to the credit card holder's bank account. The credit card company will then deduct anything owed each month in case the debts owed are not paid. Because it is linked to a bank account, credit companies commonly allow those with poor credit to apply.
On of the more confusing terms that credit card companies use is pre-approval. This term would give most the impression that they qualify for a credit card- which is not the case. In reality, it only means that there is a good chance for the recipient to obtain the credit card. This is a prime example of why consumers should educate themselves on the terms of credit card companies, as it is obviously confusing at first glance.
Another term is the variable interest rate. This is an interest rate that changes over time due to changes in the economy or the finance industry. Whatever the case, credit card holders can expect their interest rate to go up and down as the market conditions do- with no real stabilization guaranteed by the credit company.
Credit card companies also use the term minimum payment. This is a term that is used to describe the absolute lowest payment that a credit card holder can pay without getting into more serious financial problems. This amount is calculated by applying a certain percent to the total of the debt owed by the consumer.
There are quite a few terms when it comes to credit cards. Certainly, there are much more than previously listed. It is important for credit card holders to educate themselves with these terms in order to better conduct business and stay out of possible legal trouble. If there ever is a doubt or confusion as to what a credit card term means, you can usually consult a financial advisor or even the credit card company itself for more information on the subject.
Article Source: http://www.orbitaloc.com/
Find 0% credit card offers now. Also shop around by looking at a credit card comparison.
Please Rate The Above Article From The Business - General Category
Article Title: Common Credit Card Terms Explained
Not yet Rated
Syndicate Business - General Related Articles Via RSS!
Subject to Orbitaloc.com's Publisher Terms of Service, you may reprint this
article on your own website, blog, and ezine. (English only) You may also syndicate
the article via Really Simple Syndication (RSS). It is free of charge.
Free Articles on Business - General and Other FREE Content Article Topics
The preceeding is an informative article from the Business - General category.
