Top Credit card terms need to know before you swipe

Top & Most important Credit card terms need to know before you swipe

Credit card is a payment method very popular for consumers allowing purchases easy without having the risk to carry cash or other cards like debit cards. Credit cards has certain conditions and confusing to people who just started using these cards. Lets discuss some terms laid by credit cards and one must know before usage.

Annual Percentage Rate (APR)

It is an interest rate on outstanding balance in our credit card .Interest rate varies based on the card credit score and card issuer and whenever choosing a credit card we must look into APR as higher APR can end in more interest charges periodically time to time.

Credit Limit

 Every Credit card has credit limit that is maximum amount of money which allowed to spend using the card and is determine by the issuer of the card .Factors like credit score, our income, credit history also been analyzed before set of credit limit. So important thing is to stay within this limit to avoid fees and damage affecting credit score

Read :Most effective ways to avoid debt on credit card.

Minimum Payment

The term minimum payment means the smallest amount of money that we required to pay per month on the credit card .This payment is a part of the percentage of total balance which is 2% to 4%.Making minimum payment helps to avoid late fees. Although making the minimum payment can prevent late fees, it's crucial to pay above the minimum amount to prevent accumulating more interest charges in the long run.

Grace Period

The term grace period is time period that we have to pay on the credit card bill incurring without charges on interest. This period lasts between 20 to 25 days from the end of billing cycle. To avoid additional interest charges paying credit card bill in full within grace period is very important.

Balance Transfer

Moving outstanding balance from one credit card to another on lower interest rate is called Balance Transfer. This is very useful process for paying off credit card debt. One must be aware the importance any balance transfer fees .Ensure to pay off the transferred balance before promotional interest rate expires.

Read :Best ways to make most of the Credit Card in 2023

Cash  advance

The term cash advance is the advance withdrawn from bank from ATM by credit card.This will be good option on emergency situations only but has high fees and interest rate .Cash advance must be  avoided  as possible and pay them quickly if use them.

 Lastly always ensure to read terms and conditions of credit card before choosing with the help of financial advisor so unnecessary fess or charges can be avoided. So we can responsibly use credit cards and build positive credit history for financial success.