Credit Cards Terms
Basic Credit Card Terms - Part I

Have you ever read one of the cardholder agreements
for one of your credit cards? If you're like most people
the answer is no. And I don't blame you. Those agreements
are written in legalese and squeezed together in tiny
little print that is barely legible. The truth is that
credit card companies don't really want you to read it.
They'd rather you remain ignorant. But it is extremely
important that you understand the key terms of the agreement
that explain how your balance is calculated and what triggers
fees or interest rate increases.

Understanding the terms of your credit card agreement will
help you to compare cards, to know when you should switch to
a new card, and to save money by working the system. To get
you started, here is a list of key terms used in credit card
agreements and what they mean:


How many times have you received an offer in the
mail stating that you have been 'preapproved' for a credit card?
This is a somewhat deceptive practice as you have by no means
been preapproved for anything. All it means is that you met some
initial criteria for creditworthiness. There is no guarantee you
will be approved for the card if you choose to apply.

Annual Fee

Many credit cards charge an annual membership fee to
their cardholders. Typically, the charge ranges from around $25
to $75, but some premium cards charge as much as several hundred dollars.

Transaction Fee

Credit card issuers usually charge a fee for
transactions other than purchases, such as cash advances and balance
transfers, though they sometimes waive these fees for new cardholders
as part of their introductory offer. The fee amount is usually
calculated as a percentage of the transaction, though a minimum fee
applies. Some issuers cap the fee at a certain dollar amount, but
those are now few and far between.

Grace Period

Taking advantage of a credit card's grace period will
let you avoid paying finance charges by paying your balance in full
before the due date. If there is no grace period, interest will begin
accruing the day you use the card. But if the card has a grace period
of say 21 days, interest will not begin accruing for 3 weeks as long
as you paid your balance in full the previous month.

Use it to your advantage

Smart consumers use the grace period to avoid paying finance charges
on their purchases while still having the convenience of using a
credit card instead of cash.

Ed Lathrop is a successful real estate investor and a series 3 commodities futures broker.
He has extensive knowledge of the credit/mortgage markets.  He has built the financial
calculator Website, ezcalculator which is free to use and includes the calculator, "Pay Your
Credit Card Debt Quick."  Ezcalculator can be found at Mortgage Calculator or by going to