Common Credit Card Terms
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Common Credit Card Terms
Summary:
Whether you have a credit card or are considering getting one, it's important to understand some basic credit card terminology. This guide will help you navigate the essential terms associated with credit cards.Key Terms:
Credit Card:
A credit card is issued by a financial institution, allowing you to purchase goods and services on credit up to a fixed limit. You'll receive a monthly statement that needs to be paid back with interest on the borrowed amount.
Credit Limit:
The maximum amount you can spend on your credit card. Your credit limit is determined by your credit history and the type of card you have, such as Gold or Platinum.
Credit History or Credit Scoring:
Your credit history is a record of how you've managed past accounts. It helps creditors assess your likelihood of paying on time in the future.
Gold and Platinum Cards:
These are premium cards for high earners, offering higher credit limits and additional benefits not available with standard cards.
Annual Percentage Rate (APR):
The APR is the yearly interest rate charged on your outstanding balance. It's crucial to compare APRs when selecting a card.
Annual Fees:
An annual fee is charged by the issuer to cover account maintenance and service costs. Not all cards have this fee, so it's worth comparing offers.
Introductory Period:
To attract new customers, many credit card companies offer a low interest rate on balances for an initial period, usually lasting 6 to 12 months.
Balance Transfers:
This allows you to move your outstanding balance to a card with better terms, often with low or 0% interest during the introductory period. Balance transfer fees may apply.
Reward Programs:
These programs allow you to earn points based on your card transactions. Points can be redeemed for cashback, discounts, or other rewards.
PIN (Personal Identification Number):
A secure code chosen by you for card transactions and ATM access. Keep your PIN confidential to protect your account.
Understanding these terms can help you make informed decisions and manage your credit card more effectively.
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