The monthly credit card bill might be Greek to someone who is not familiar
with the credit card terminology used on it. To make sure that you understand
the documents properly seven important credit card terms are explained below.
1. Amount due / Due Amount
This is the minimum payment due per month and not the total amount due on the card.
2. APR (Annual Percentage Rate )
The interest charged by credit card company on your Due amount.
Due Date/Date Due
It is the date by which, the credit card company expects your payment. It is
essential that you abide by this date. Care should be taken to ensure that the
payment reach the credit card company and you don't fall into a last-minute-rush
trap. If you don't send the payment the credit card companies slap a late
payment penalty on you and your credit rating might suffer.
4. Grace Period
Grace period allows to purchase items or services with out paying the
interest. It is in the interest of credit card holder to take the advantage of
this grace period. However, he should take care that the borrowing should not
exceed his repayment capacity or he will fall into a debt trap. One essential
requirement of grace period is that you should pay your credit card bills by the
end of every month. If there is no grace period the interest is charged on
your credit card purchases from day one.
5. Cash Advance
The amount you took as cash loan with your credit card. You could have taken
this amount from a Bank or credit cards ATM. Cash advance come with a cash
advance fee and the rate of interest are higher than regular APR. So, you need
to keep a tab on taking cash advances with your credit card.
Minimum Monthly Payment
It is the minimum amount which you must pay to the credit card company
to remain in their good books. Paying monthly minimum is the least efficient and
most expensive way to repay your credit card debt. The accrued debt could take
years and years to repay if you make only the monthly minimum. It is in
the best interest of the credit card companies because it gets them the maximum
revenue. So, they encourage a credit card holder to pay the minimum balance and
try to keep it a low amount by which, the credit card holder gets comfort.
However, the credit card holder should not fall into the trap and try to get rid
of the credit card debt as soon as possible.
7. Late payment penalty /Late Fee
The amount credit card company charges when they don't receive your
payments by the due date.
These seven terms form the basis of any credit card offer. In one way or
another you will find them listed in your credit card statement. The positives
and negatives of these terms if understood carefully by a credit card borrower
can help him save a lot on his credit card bills.