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Credit Card Terminologies You Should Know About

Credit cards are much more than just a piece of plastic. They’re complex products that can help improve your financial situation if you use them responsibly. If you don’t, the same card may even seriously ruin you financially. In which case, you may need the services of a professional credit repair company.

Like other financial products, credit cards are full of jargon that you may hear daily but not know the meaning of. And it’s hard to manage something you’re not familiar with.

So, today we’re bringing you a list of the most common credit card terms that will help you beforehand. Educating yourself of this vocabulary not only makes you an informed consumer but also allows you to maximize the value of your credit card(s).

Common Credit Card Terms Everyone Should Know

  • Credit Score

A credit score is a numerical evaluation that shows an individual’s level of creditworthiness. Simply put, a credit score is an indicator of how likely it is that you will pay back the money that has been loaned to you.

The credit bureaus use the history from your credit report and calculate a credit score in a range between 300 and 850. The higher your credit score, the more worthy you are to be offered better credit terms.

  • Annual Fee

The annual fee is the yearly charge some companies add to your credit card statement in return for managing your account.

Credit card annual fees range from approximately $25–$500 per year, depending on the card. Ideally, you may want to choose a card that doesn’t impose an annual fee.

  • Balance

A credit card balance is the total amount of money you owe to your credit card company—the balance changes based on when and how you use your card.

For instance, when you use your credit card to purchase, the balance increases. Identically, when you make a payment, the balance decreases.

  • Grace Period

A grace period is between the end of a billing cycle and the due date the balance is to be paid. During a grace period, no interest is charged. Some credit card firms only provide a grace period to cardholders who do not carry any balance.

Grace periods are typically between 21 to  25 days. A longer grace period gives you more time to pay off your balance and avoid interest altogether.

  • Annual Percentage Rate (APR)

APR is the amount of interest you will accrue on a credit card within a year if you don’t pay your balance in full each month in terms of credit cards. After the grace period, the rate is applied to purchases, cash advances, and any penalty fees.

  • Balance Transfer

A balance transfer is a process of moving part or all of your balance from one card to another. This can help if you are moving to a card with a lower interest rate, but there may be fees for transferring your balance.

Conclusion

The more you know about your credit card, the better you understand how it works. And, the easier it becomes to use it responsibly and extract more value out of it.

Do you need help fixing your credit score? Get in touch with companies like Gifted Tax Services and get the finest credit repair services to help you get back on track.

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