Credit
cards provide convenience in life. But it can bring you into debt. It's good to
get back to the basic ideas, and help to explore the fundamentals. Here are
some things you should know about credit cards:
Terms and
Conditions
It is an
agreement which contains rules governing the issuance and use of credit cards.
In the form, you will sign and use the card. You confirm that you have read,
understood and accept the Terms and Conditions. If you agree, then you can use
the card according to the rules that have been agreed.
Total Amount
The total
amount of your debt, including purchases, cash advance, finance charges,
penalties, costs, and others at the date of the statement.
Minimum Amount
Least
amount you need to be paid on or before the Payment Due Date to keep your
account from going into default. Some of them the sum of 1) the amount of the
balance (excluding purchases in installments) multiplied by the percentage of
required payments; 2) monthly installments due, if any; 3) any amount that
exceeds your credit limit; 4) all amounts due.
Credit limit
A maximum
or total amount for the purchase of certain goods, withdraw cash, transfer
funds or balances, and other financial expenses that can be charged on your credit
card.
Grace Period
the
number of days before the start card issuer to charge interest on new purchases
credit card. Usually a period of 25 to 30 days. Benefits of a grace period is
that you can enjoy if you pay the bill in full. It was canceled after the
previous month's bill is not paid in full. Each new purchase will be added to
your balance and interest.
Financial
Expenses
Amount of
interest charged on all transactions on your statement. Interest is usually
calculated by multiplying the Principal, the rate and time. Time here is
calculated per transaction basis for different transactions on your statement
may have a variety of date of posting.
Average daily
balance
The most
commonly used method of computing the financial burden. With regard to credit
your account on the day the payment is received by the publisher. To find the
balance due, the total balance of the initial publisher for each day in the
billing period and subtracting credits made to your account that day. While new
purchases may or may not be added to the balance, depending on your plan, cash
is usually included. The resulting daily balances are added to the billing
cycle. This amount is then divided by the number of days in the billing period
to get the "average daily balance."
Balance
Another
way for computing the financial burden. In this method, the interest rate
applied to the balance amount at the end of the billing period. It will include
purchases and payments made during the billing period.
Cost in Credit Card
Cash Advance
Fee
Charged
to you every time you use the card to withdraw cash. It usually ranges from 3%
to 5% of the total advances or certain agreed amount, whichever is higher. In
addition to the cost of advances, some card issuers charge interest or finance
charges on the amount of the down payment is calculated from the date of
billing hold up to date while others calculate the interest only when the
amount of the down payment is not paid on the due date.
Overlimit fee
Charged
to you if your total amount due exceeds the approved credit limit on your
cut-off date.
Card
Replacement Fee
Charged
to you for the replacement of lost, stolen or damaged card
Balance
transfer fee
Charged
every time you transfer your balance from one credit card to another.
Annual fee
The
amount you pay for as and using a credit card. It varies depending on the type
of card you select and add your account statement and each anniversary date
thereafter.
Late Payment
Fee
Charged
to the next billing statement. If you fail to pay at least the minimum amount
due on or before the due date of payment. Some issuers charge a fixed amount
while others charge a percentage of the minimum payment (eg 3% to 5%).
Credit Card ‘Consider Options’
Installmen
Payment Facilities
This
facility allows you to buy goods and services from merchants using your card
and pay for the same thing, together with applicable interest and other costs
or the rate of zero percent, the monthly payment. In the particular case or
promotion, or card issuer company may allow you to convert the cash withdrawal
transaction, the existing balance on the card or the balance on the credit card
of other issues in installment transactions, which must be paid in monthly
payments subject to the applicable interest and . Other fees
Cash Advance
Cash advances
from your credit card through an ATM or over the counter. The interest rate for
cash advances is usually higher than the Annual Percentage Rate (APR) for
purchases. In addition to the interest you will pay on the amount advanced, you
are also charged a cash advance. Limit your down payment is set as a percentage
of your credit limit. At any given time, the total advances and interest on
them can not exceed the limits of your down payment.
Balance
Transfer
The
process of moving an unpaid credit card debt from one issuer to another with
whom you also have cards. Card issuers offer teaser rates to encourage
cardholders to transfer their balances to other publishers to take advantage of
lower financial burden. This is one option if you are having trouble paying
your credit card debt. It allows you to save a higher monthly fee, then the
smart way to lower the cost of your balance. But it comes at a cost and a lower
monthly rate offered may be limited only to the month. Inquire about this to
make sure you do not end up paying the same monthly financial burden or higher.
Life for giving.
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