Credit Card Basics

If you are looking for a credit card there are a few things to keep in mind. The type of card, or the company that will serve you best will depend on your purpose for the card, whether you are planning to clear the balance in full each month, transfer a balance or carry a monthly balance. Here are some terms to look for and what they mean.

Basic Terms

Interest Rates This the percentage of the balance that you are charged by the bank as the cost of the credit, it may also be called APR (annual percentage rate). For example in your APR is 10% and you have a balance of $1000 the interest you will pay will be $100 on an annual basis.

Interest will begin to be charged either from the date of the transaction or from the statement date. If it is the later you can receive up to a month of free interest. Interest rates vary from under 5% to over 20% depending on your credit and how badly the bank wants your business.

Balance transfers This is transferring the balance of one card to another. A lot of banks offer an interest free period for transfers so it is possible to continuously transfer balances and avoid interest.

Introductory rates This is a lower rate for a period of time to entice customers to take a card with that bank. A bank may offer a rate of 4.9% for 6 months increasing to 14.9% after that for example. These can be good if you are need to borrow money on a short term basis.

Cash back This is the opportunity to receive cash when you make a purchase, this obviously benefit’s the bank by encouraging you to borrow more money. Cash back though is often charged at a higher rate and can be subject to different terms than a regular purchase. Check you contract to be sure.

Alway understand the terms of your credit card agreement before using your card.

Debt Repayment

Mortgage Basics

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