Financial Literacy for Everyone
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Credit Card Terminology

Understanding the language of credit cards will help you make informed decisions when choosing one. Below is a list of some of the most commonly used credit card terms.

Annual Fee
The once-a-year cost of owning a credit card. Some financial institutions offer cards with no annual fees. The annual fee is part of the total cost of credit.

Annual Percentage Rate (APR)
The yearly interest rate charged on outstanding credit card balances.

Balance
An amount of money. In personal banking, balance refers to the amount of money in a savings or checking account. In credit, balance refers to an amount of money owed.

Credit Reference Agency
A reporting agency that collects information on consumer credit usage.

Credit Line
The maximum dollar amount that can be charged on a specific credit card account.

Consumer Credit Data
Data on an individual's interactions with credit providers, including records on borrowing and repayments. The data is contained in a report that is kept on file by a credit reference agency, and will be used by financial institutions to determine whether an individual qualifies for credit.

Grace Period
The time a borrower is allowed after a payment is due to make that payment without adding to the interest owed.

Introductory Rate
Credit card issuers may offer low introductory annual percentage rates as special offers. Be sure to fully understand how long the introductory rate will last and what the standard rate will be.

Minimum Payment
The lowest amount of money that you are required to pay on your credit card statement each month.

Overdraft Protection
A banking service that protects you from overdraft penalties or bounced checks in the case of insufficient funds.