Credit Cards
Understanding Your Credit Card Statement
Finance Charges
Finance charges are also known as interest. In a nutshell, this is what you pay
a lender for borrowing money from their credit card. The finance charge on your
monthly credit card statement is the interest you pay on the balance of your account
– that is why you should always try to keep a very low balance.
Grace Period
Your grace period is the number of days you have before you trigger a finance charge
from your credit card company. Remember, study the fine print on your statement,
because that is where you will find the grace period that the credit card company
offers.
But keep in mind, on most credit cards the grace period only benefits those whose previous month’s balance has been paid in full. So unless you have paid your credit card in full the previous month, you probably cannot take full advantage of the grace period. Those with good credit card management enjoy more benefits from the credit card companies. And regarding cash advances using a credit card, there are no grace periods, even if the previous balance was paid in full.
Credit Card Fees
Credit card fees differ depending on the type of card that you use. Read the fine
print on your monthly statement (part of good credit card management), the annual
disclosure statement. Fees can jump up and bite you at the most inappropriate time,
so be aware of them.
Here are a number of general fees to be conscious of:
Annual Fee - An annual fee is what you pay to have a credit card. The amount of the annual fee could vary from card to card. Some cards that offer benefits such as frequent flyer miles may have a higher fee. But do yourself a favor and research as many cards as possible. There are cards that have no annual fee and you may be able to find a card that matches your financial needs.
Late Fee - This is a fee you pay the bank or credit card issuer if your monthly payment is received after the due date. The late payment fee will differ, so again, do your research and find a credit card that charges the least amount if you happen to be late on a payment. Also, another bad thing about late payments is that they show up on your credit report.
Over Limit Fee – Also known as over-the-credit-limit fee. Each credit card has a credit line that is usually founded on your lender's review of your credit report. If you go over your credit limit a penalty will be assessed each time it happens.
Returned Check Fee - If the check you send your credit card company bounces, you can be sure that they will add an additional fee for the returned check. And your bank will gladly charge your checking account for this mistake. It is called an overdraft fee.
