What You Should Know About Credit Card Jargon Buster
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Credit Card Jargon Explained: A Quick Guide
Credit cards come with a unique set of terms that can be confusing. Understanding these terms is crucial for managing your credit effectively. Here’s a simplified alphabetical guide to some common credit card jargon.
Affinity Card
An affinity card lets you support a charity of your choice with a portion of your spending. Be cautious, though?"these cards often have higher interest rates, so avoid signing up solely out of guilt.APR (Annual Percentage Rate)
The APR indicates your annual interest rate, expressed as a percentage of your card balance. It’s essential to know this rate as it affects how much interest you’ll pay.ATM (Automated Teller Machine)
Also known as a cash machine, an ATM lets you withdraw cash using your credit card, often with an extra fee.Balance Transfer
This involves moving debt from one credit card to another, typically to benefit from a lower interest rate.Credit Limit
Your credit limit is the maximum amount you can spend or withdraw. Exceeding this limit may result in a declined transaction and an over-limit fee.Fixed Rate
A fixed rate card offers a set interest rate when you sign up, which theoretically remains unchanged. However, be aware that rates can still be adjusted.Grace Period
The grace period is the time between making a purchase and when interest starts accruing. While good cards offer grace periods up to two months, some may not offer any.Minimum Payment
The minimum payment is the smallest amount you’re required to pay each month. It’s typically around 2% of your balance, but paying only the minimum can lead to prolonged debt.Sub-prime
This term refers to customers considered risky by lenders. If labeled sub-prime, you might receive offers for secured loans, where assets are at risk if you default.Teaser Rate
A teaser rate is an initial low-interest rate used to attract new customers, clearly advertised but often short-lived, with higher rates following.Variable Rate
A variable rate changes with the national interest rate. It’s beneficial if rates are expected to drop but risky if they’re likely to rise.By familiarizing yourself with these terms, you can make more informed decisions and better manage your credit card usage.
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