A person who struggles in understanding payment rules and interpreting billing statements of credit cards may face trouble while using them in long term. Credit card terminologies are easy to understand as compared to those of other financial products. Understanding typical expressions related with credit card are fine ways to remain one step in front. Here is a list of terminologies which will help you in getting sound knowledge on credit card subject-
• APR: It is an annual percentage rate which is the charge in the form of interest on credit card balance. APR stands null and void, if balance on the credit card is nil.
• Billing Cycle: It is time span or duration between the two billing statements. Billing cycle may vary according to the fluctuations in due dates.
• Credit Line: The amount of leverage a credit card company gives to customer is considered as credit line. In case a customer crosses his credit line, he can’t borrow more, until he repays his previous dues.
• Grace Period: It is duration within which a customer can clear his credit card dues without paying interest or surplus charges. The grace period on credit card varies from company to company.
• Secured Card: It is a kind of credit card which is linked to customer’s bank savings account. Secured card makes sure that your monthly payments are never missed. This kind of credit card offered the customers who have poor credit scores and bad credit history.
• Card Holder Agreement: The card holder agreement covers all the details related with credit card like interest rate charges, grace period and credit line.
• Average Daily Balance: It is a ratio of balance on customer’s credit card to the number of days in month. This ratio is utilized to calculate interest rate charges that will reflect in customer’s every month’s bill.
• Charge back: It is a kind of transaction that gets rejected as purchases made do not comply with the rules set in merchant account.
Understanding above terms means a difference between maintaining credit card properly and getting into enormous debt that is difficult to manage.