Credit Card Terms

Important Credit Card Plan terms you must consider.

Credit card companies market their services hard by sending “pre-approved” card offers to would be clients through the mail. Chances are you’ve received one of this offers in your mail recently. Such promotions have being in existence a long time now. Although getting such a card offer can be convenient to some extent, if you are actively seeking a new credit card account, you shouldn't rush into the first offer that comes along, but rather consider in detail, the plan terms associated with that particular card.

There are several plan terms that you should study closely whilst shopping around for credit cards, if you want to avoid putting yourself into financial shackles.. These terms affect the overall cost of taking on the plastic.  In this article we will take a look at some of the credit card plan terms you need to consider before choosing a company to deal with.

Consider a company that gives a “free period” or grace period, because without a free period, the card issuer may impose finance charges from the date you use your card or from the date each transaction is posted to your account.  A free period enables you to pay back your balance in full before the due date in order to avoid finance charges, and it’s usually mailed at least 14 days before the due date, giving you an adequate enough time to pay.

Another very important term to take note of is the APR  or Annual Percentage Rate. This is the measure of the actual cost of credit, expressed as a yearly rate. APR often changes when there are interest rate movements or other economic indicators, but companies must disclose this before you open the account and indicate it on your account statements.

Apart from the annual percentage rate, you need to consider whether the card issuer levies an annual fee. Annual fees vary and will be affected by the degree of marketing competition between card companies at any time.

You also need to know about the method card issuers employ in calculating your interest charges if you don’t have a free period, or if you are expecting to pay for purchases over time, rather than clearing the balance when you receive your statement. Knowing this will help you keep your interest charges low by linking your buying patterns to your repayment habits.

Card issuing companies tend to apply charges and transaction fees for late and missed payments, when you get cash advances and if you exceed your credit limit. You need to check all these out before deciding on the card to have.