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Your First Credit Card: Terms you Need to Know

Congratulations! You’re on the road to financial independence and a great credit score with your first credit card!

But before you begin using your first credit card, you’ll need to first make sure you completely understand the terms and conditions of your credit card – and that means understanding the language that credit card companies use when describing these terms and conditions.

A solid understanding of your credit card’s terms and conditions will help you make the best decisions regarding your credit card so that you don’t end up mismanaging your credit and ultimately ruining your credit score.

Credit Card Terms to Know:

• Annual Fee – An annual fee is essentially a fee charged by the credit card company once a year to you for the privilege of using the credit card. Most annual fees range between $20 and $40, although there are plenty of credit card companies out there that charge no annual fee.
• Annual Percentage Rate (APR) – Ann annual percentage rate is the interest rate charged to make purchases. Always pay close attention to you card’s APR to make sure you are receiving the most competitive interest rate possible.
• Credit Line –A credit line is the maximum amount you may charge on your credit card. If you go over this limit, the credit card company will likely hit you with costly over-the-limit fees.
• Due Date – Your due date is the date that your credit card payment is due every month. If you don’t meet this due date, you will likely be charged a late payment fee and even a hike in your APR, so always pay attention to this date and make a point to get the payment in at least a week or so before the due date to avoid any problems.
• Card Member Agreement – A card member agreement details all of the card’s terms and conditions, all of which you agree to every time you make a purchase on your credit card. Never, ever make a credit card purchase if you don’t understand your card member agreement. Contact the credit card company if there is anything in the statement that is not clear.

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Posted on Monday, Aug 03, 2009 under "Choosing Credit Card"
Post tags: annual fee, APR, card member agreement, credit card terms, credit line, Credit Score, due date, first credit card, terms and conditions

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