One way to keep ahead while ensuring financial security is to understand your credit card glossary . If you take time to read the application, and understand the agreement terms and conditions on the card, then you will be in a better position to use the card more responsibly and stay away from falling into avoidable debt traps. Here are some of the critical credit card terms, which you must understand.
The adjusted balance method is a formula used by credit card companies to calculate the amount of money payable monthly. This can include payments made to the company during the month subtracted from the current balance as well as the finance charges added on the card to achieve the adjusted balance.
The annual fee constitutes the amount of money a credit card company charges the cardholder at least once a year for card usage. This may also come with benefits like travel and other rewards as long as one uses the card, or it may mean getting credit with bad credit rating. The billing cycle is the period in between statements, and which varies from one month to the other. These billing cycles often adjust the due dates.
There are some Credit cards with fixed interest rates, and these rates remain constant regardless of the financial conditions. The financial institution may choose to change the rate. However, they will always inform you of the plan approximately two weeks prior to the change taking effect.
The credit line is a term, which sometimes refers to available credit, and is the amount of credit the company allows you to borrow. If you happen to spend all of it, then you reach the total credit available and you can no longer use the card until you have paid the balance.
The minimum payment is the least amount of money you are required to pay to the credit card company before the due date, which helps avert a late fee for not making the payment on time. While the charge back is the amount charged in case of a returned transaction due to a dispute from a merchant or the purchase failing to comply to the merchants account’s rules and regulations.