|APR for purchases
The interest rate you will pay, on an annual basis, if you carry over balances on purchases from one billing cycle to the next. If the card has a temporary introductory rate, the rate that applies after the temporary rate expires is also stated.
The interest rates you will pay, on an annual basis, if you get a cash advance on your credit card, if you transfer a balance from another credit card, or if the card issuer applies penalty rates. (More information on the penalty rate may be included outside the disclosure box--for example, in a footnote.)
If the card has a variable rate instead of a fixed rate, this section will tell you how the variable rate is determined. (More information may be included outside the disclosure box--for example, in a footnote.)
Grace period for repayment of balances for purchases
The number of days you have to pay your bill in full without triggering any finance charges. With most plans, the grace period applies only to purchases; cash advances and balance transfers may start accruing interest immediately.
Method of computing the balance for purchases
The method that will be used to calculate your outstanding balance if you carry over a balance and will pay a finance charge.
The annual fee (or other periodic fee) the issuer charges for you to have the card. You may have to pay this fee even if you never use the card.
Minimum finance charge
Any minimum or fixed finance charge that could be imposed during a billing cycle. A minimum finance charge usually applies only when a finance charge is imposed, that is, when you carry over a balance.
Transaction fee for cash advances
Any charge imposed when you use the card for a cash advance. If the card charges transaction fees for purchases, these fees will also be stated here.
A fee for transferring balances from another card to this card, if any.
The fee imposed if your payment is late, if any.
The fee imposed if your charges exceed the credit limit set for your card, if any.
Cracking the Credit Code
Glossary of Credit Terms
A flat, yearly charge similar to a membership fee
Annual percentage rate (APR)
A measure of the cost of credit expressed as a yearly rate. Many credit card plans charge different APRs for credit used in different ways--for example, one APR for purchases, another for cash advances, and still another for balance transfers. Some plans may increase the APR if a payment is late.
A fee charged if you obtain a cash advance. This fee is in addition to the interest rate charged on the amount of the advance.
The dollar amount you pay to use credit. Besides interest costs, the finance charge may include other charges such as cash-advance fees.
A period of time, often about 25 days, during which you can pay your credit card bill without incurring a finance charge. Under nearly all credit card plans, the grace period applies only if you pay your balance in full each month. It does not apply if you carry a balance forward. Also, the grace period usually does not apply to cash advances, which may begin accruing interest from the day of the transaction.
A measure of the cost of credit, expressed as a percent. For variable-rate credit card plans, the interest rate is explicitly tied to another interest rate, such as the prime rate or the Treasury bill rate. If the other rate changes, the rate on your card will, too. The interest rate on fixed-rate credit card plans, though not explicitly tied to changes in other interest rates, can also change over time. The card issuer must notify you before the "fixed" interest rate is changed. A tiered interest rate means that different rates apply to different levels of the outstanding balance (for example, 16% on balances of $1 - $500; 17% on balances above $500).
A charge imposed when your payment is late. If your payment arrives after the grace period, you may be charged both a finance charge (the interest on your outstanding balance) and a late-payment charge. Some card issuers may also impose a penalty rate if you have more than one late payment within several months.
A fee imposed when your charges exceed the credit limit set on your card.
The rate that applies under specific circumstances set out by the card issuer. For example, if you make 2 late payments within 6 months, a card issuer may have a policy of raising the interest rate.
The rate you are charged each billing period. For most credit card plans, the periodic rate is a monthly rate, calculated by dividing the APR by 12. For example, a credit card with an 18% APR has a monthly periodic rate of 1.5%.
For more information
You can find listings of credit card plans, rates, and terms on the Internet, in personal finance magazines, and in newspapers.
The following federal agencies are responsible for enforcing the federal Truth in Lending Act, the law that governs disclosure of terms for credit cards. Questions concerning compliance by a particular financial institution or credit card issuer should be directed to the institution's regulatory agency.
National Credit Union Administration
Office of Public and Congressional Affairs
1775 Duke Street
Alexandria, VA 22314-3428
(regulates federally chartered credit unions)
Federal Reserve Board
Division of Consumer and Community Affairs
Mail Stop 801
Washington, DC 20551
(regulates state banks that are members of the Federal Reserve System)
Controller of the Currency
Office of the Ombudsman
Customer Assistance Unit
1301 McKinney Street, Suite 3710
Houston, TX 77010
1 (800) 613-6743
(regulates banks with "national" in the name or "N.A." after the name)
Federal Deposit Insurance Corporation
Compliance and Consumer Affairs
550 17th Street, NW
Washington, DC 20429
(202) 942-3100 or 1 (877) 275-3342
(regulates state-chartered banks that are not members of the Federal Reserve System)
Federal Trade Commission
Consumer Response Center
6th and Pennsylvania, NW
Washington, DC 20580
877-FTC-HELP - toll free (877-382-4357)
(regulates finance companies, stores, auto dealers, mortgage companies, and credit bureaus)