Credit Card Terms Everyone Should Know

Published on: 15 April 2023 Last Updated on: 13 May 2023

Whether you are a new credit card holder or have been using it for a while, you must have come across some credit card jargon that is hard to decipher. For instance, if you decide to apply for a credit card online, you might need to understand the annual fee, interest rate, and other charges applicable to that card. Even though all credit cards work in the same way, they differ a lot in terms of the benefits and rewards they offer. So, to make it easier for you to understand the basic credit card terminology and choose the best one, here is a quick guide for you.

Annual Fee

Card companies may charge annual fees on credit cards. This might range from a few hundred to a few thousand depending on the benefits you can avail yourself of on the card. However, certain providers may waive the fee for the first year, while others, may offer credit cards that are free for a lifetime. So, depending upon the kind of benefits you seek, you may choose a lifetime free credit card or a card that has an annual fee but may waive it off on spending a certain amount.

Credit Limit

This is the overall spending limit or credit line provided by the card issuer. There are several criteria such as your credit score, income, repayment history, as well as the length of your relationship with the bank that determines your credit card limit. Banks may sometimes offer you higher limits if you already have high limits on your existing cards along with a strong repayment history.

Additionally, when checking your credit card limit, there are further three terms that you must be aware of Total Credit Limit and Available Credit Limit.

Total Credit Limit: This is the credit limit granted by the bank when the card is issued. The total limit can also be increased when you request for the same or if you accept a limit increase offered by the provider.
Available Credit Limit: This is the credit limit that is available on one’s credit card at any one moment. In other terms, the available credit limit is the difference between the entire credit limit and the card’s current outstanding balance.
Cash Limit: Card issuers also offer a certain portion of your total credit limit as cash limit. This defines the amount of cash you can withdraw using your credit card. However, cash withdrawal from credit cards should be the last resort as cash withdrawal is not eligible for the interest-free period and even a small amount can escalate to a huge debt.

Billing Cycle

The billing cycle refers to the period between the closing of the previous statement and the new statement date. Your credit card provider compiles your statement at the end of your billing cycle, and you have until the due date to make the payment.

Due Date

This is the specified monthly date by which all outstanding payments must be made. To avoid late payment penalties and high-interest charges on unpaid dues, you must make the payment on or before the due date.

Total Amount Due And Minimum Amount Due

At the end of each billing cycle, a new statement is generated and it shows the dues that you owe on your card. Total amount due, as the name suggests, is the total sum that you owe to the issuer, and on making full payment, no charges will be applicable.

However, if you cannot afford to pay the total due, card providers give you the option to pay the minimum amount due to keep your card active and avoid late payment charges. It is usually 5% of the total due and also includes any active EMIs, additional fees, charges, etc. An important thing to note is that on making only the minimum payment, the rest of the outstanding balance starts attracting finance charges and new transactions become ineligible for the interest-free period as well. This is why you should always pay the total due and not just the minimum amount.

Finance Charges And APR

Interest rates on credit card balances are known as finance charges and APR is the annual percentage of interest. It is the rate of interest on all transactions from the date of the transaction until the cardholder’s balance is paid back in full. Note that interest on credit cards is compounded on a daily basis.

Being acquainted with these terms will ensure judicious use of the card and help you stay out of debt.

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Abdul Aziz Mondol

Abdul Aziz Mondol is a professional blogger who is having a colossal interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, he loves to share content related to business, finance, technology, and the gaming niche.

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How To Cope Up With Debt For New Residents In Canada

For new residents in Canada, it is not unusual to incur debt. Moving and settling in a new country often involves a lot of money, after all. If you are not careful, you will find yourself coping with unmanageable dues, dealing with bouncing checks, and avoiding calls from collection agencies. There is no absolute way to get rid of debts altogether, but with proper planning and execution, you will be able to get your finances back on track. Freeing Up Money To Reduce Debt The first thing to do to take control of your debts is to free up some money. This will involve creating a spending plan, paying your debts consistently, and tracking your progress. With a spending plan, you will be able to determine how much money you can work with. Start by summing your monthly expenses and removing them from your income. The money left over is the money you will use to pay down your debt. If you are spending more than you earn and have no spare money, you need to review your spending habits and determine which ones you have to cut down. Sitting down with a budgeting expert may be advantageous. One way to reduce spending is by not using credit, at least until you have paid off your debt. This includes your overdraft. If you have to use it, you must treat it like a bill that you need to settle. Another way to free up money is by spending less than you plan to spend. Many people get into debt because they buy things they cannot afford. Follow a simple rule – if you do not have money, do not purchase it. If you can be gratified with less than what you usually want, you can use the cash you saved and pay down your debt. Eventually, you will have adjusted to your new setup and learn to put away money for other financial priorities. Tracking your spending and identifying which areas to cut back from also helps. You need to exercise honesty in doing this, otherwise, it will not work. Many people end up being surprised by how much they actually spend daily. Once you have mapped out your spending habits, it will be easy to pinpoint areas where you can cut back. The next step will be to allocate the money you found and settle your debts. Using Funds Strategically To Eliminate Debt Once you have freed up money, you can use it to pay down your debts. There are different ways to do it strategically. New residents in Canada typically apply for a mortgage to be able to afford a home. Banks and lending institutions require a minimum of 35% down payment, paid in cash, with a maximum of 65% of the value of the home provided as a mortgage. Monthly payments will be based on the mortgage option they will choose. In paying a mortgage, a bi-weekly payment may be better than a monthly option to accelerate the process. It may seem like you are paying the same amount of mortgage, but you are actually settling your debt faster by including an equivalent of one extra payment annually. This way, you will be able to pay everything off several years earlier. For more information about the mortgage, visit this page: https://alpinecredits.ca/home-equity-line-of-credit-vs-mortgage/ Another smart way to settle your debt is by paying as much extra as you can afford. With a minimum credit card payment per month, it will take a long time to pay off the balance. Meanwhile, some borrowers choose to settle their most expensive debts first, then work their way to the least. In this snowball method, you will be focusing all your extra payments on the debt with the biggest rate, while making minimum payments on all the others. First, arrange your debts in the order of their interest rates. Then, pick the one that is charging you the most and prioritize it. Once your most expensive debt is settled, use all the money you were reserving and allocate it to the next highest loan. Continue this scheme until you are left with the least expensive debt to pay down. Many attest to this strategy as very effective in getting out of debt quickly. If your debts are becoming too unmanageable and you are really struggling with your financial obligations, it may be time to start speaking with a credit counselor. Credit counselors are experts in helping people assess their situation and eventually put together a working plan to set their finances back on track. They will also negotiate with your creditors to explore your options. Credit counseling is a legal process that is usually for free or at a very low cost. Other Ways To Cope-Up With Debt Having your own vehicle when living in Canada is useful as there are places where public transport is limited. When buying, it is better to choose a quality used car rather than a new one. You can go to a local library or read reviews online to see your options. Meanwhile, if you do choose to buy a new car, pick one with good fuel economy. By keeping it for 15 years, you can stretch your dollars and have plenty of time to save for another vehicle. Reducing your grocery bills also helps. Watch out for sales then stockpile your cupboard with non-perishable items like canned goods, rice, and cereals. Freeze bread and meat properly. Live off your stocks and skip doing groceries every month. This way, you can save up to 25% of your annual bill. If this is not manageable, try skipping once every other month. You can still save a good amount of money. Finally, if you want, you can get a second job or pick up additional shifts to earn extra money. For this to work, you have to consistently allot all your extra income to pay your debts. This does not always suite everyone, but if you can do it, you will find yourself free of debt faster. You also do not need to work extra shifts forever, just until all your debts are paid off. After that, you can consider scaling back again. More Resources: How to Eliminate Hassles of Outstation Travels The Five Most Important Things to Know Before Moving How to Save Time During Your Workday?

How Money Management And Technology Combine

In recent years, virtual money management has become a core component of how we build credit, pay bills, manage investments, and much more. Learning how to manage money using today’s technology is an effective tool and one that allows you more freedom to enjoy the money you earn or save towards your goals. Proper money management and handling always promise you better savings during your retirement. So it is always better to keep using the apps and digital concepts to handle your financial issues. You must start it from an early age. More you are becoming accurate with your money management. Your future financial decisions are going to be more precise. Let’s see what the advantages of paperless financial money management apps and tools are. The Importance Of Money Management Money management is an essential component of living a healthy, sustainable life. Whether you’re a single working professional or balancing a family, knowing how to spend and save is a tool that will help you succeed and thrive in life, whether that means owning a home, traveling the world, or being able to put your children through school. You can easily manage your financial factors with the proper money management strategies. The small steps are starting off the taking the big financial decision. When you are introducing the technical concepts into your money management, you can easily calculate your expenses and earnings. The paperless record-keeping strategies are more accurate. This is because you do not have to calculate all the factors; the apps will keep track of all your financial activities. When you have the right tools at your disposal, you can conveniently manage your expenses and predict future spending so that you can successfully reach those short-term and long-term goals. The Benefits of Alternative Lending Flexibility is key in any sound money management resource. Traditional lenders have often been the go-to, but in recent years, the availability of alternative lenders has become sufficient and convenient for borrowers looking for short-term relief. To get a loan online, borrowers simply have to submit basic banking details virtually and are rewarded with an efficient and reliable direct deposit to help them navigate their temporary cash flow issues. Convenience is important when you’re struggling with certain payments, particularly high-interest debts. The ability to consolidate with a single lump sum is one helpful, virtual resource that borrowers can take advantage of, forgoing the red tape attached to many traditional avenues. For the money management resources, what strategies you are going to follow. Pen and papers or the technical digital concept? For traditional lending, often the lenders are misguiding the borrowers and charging higher interest. But when you are using the digital concepts for it. All of your digital ideas are going to be more accurate and transparent. How Budget Apps Add Accountability? Our mobile devices are constantly in our orbit, whether we’re at home, work, or at a social event. The development of budget apps has allowed working professionals to keep track of their finances no matter where they are. A budget-handling money management app can range from basic expense tracking to more sophisticated features such as bill payments and overseeing investments. The goal of a budget app is to provide a convenient, accessible way to navigate your everyday finances, so you can see where you’re spending and find healthier ways to save and invest. The ability to combine finances and technology allows households and families to hold each other accountable and work towards their brightest financial future. Getting Creative There is no shortage of financial knowledge to consume, and there are several money management resources anyone can use to build healthier spending habits. For more traditional measures, there is a wealth of information to be found in finance books, whether you’re in the early stages of looking for detailed investment tips. On the other side, the rise of podcasts has led to a surge in the financial industry, with various financial experts lending their insight into a range of topics from general financial literacy to building long-term wealth. Read Also: A Digital Asset Management Solution Overview Are Debt Consolidation Loans Recommended for Credit Card Consolidation 8 Simple Tips To Pay Off Your Loans Faster Does Inflation Determine The Price Of Bitcoins: What You Need To Know Using Short-Term Loans to Help Rebuild Your Credit Score

Government Debt Relief And Student Loans

Graduation from a college or a university is a terrific accomplishment. However, the last thing anyone wants to worry about after all those years of hard work and late nights of studying is thousands of dollars in student debt or government debt relief. Unfortunately, that's the reality for millions of graduates around the country. Currently, the national student debt sits at a staggering $1.73 trillion. If you are one of the many US citizens living under a dark cloud of student debt, it might be time to start thinking about government debt relief and student loans. If you don't know where to turn, US government debt relief programs are an excellent place to start. What Are The Student Loan Debt Forgiveness? The US Department of Education offers a federal student loan forgiveness program that offers debt relief to some public service workers who have made payments for a certain number of years. The government debt relief and forgiveness programs are for workers such as teachers, law enforcement, medics, and nurses. However, there are other types of student loan forgiveness, including the scenario where you find yourself with a disability and are unable to work in your chosen field. Even if you think you know everything about your student loan situation, it never hurts to double-check. You should always do your research to find out whether you qualify for any kind of student loan forgiveness program before moving on to another option. When Doesn’t You Qualify Consumer Debt? While we’re on the subject of government debt relief, it’s important to note there are no government programs for dealing with most types of consumer debt, such as credit cards, personal loans, and the like. Consumer debt is not always available for everyone. Many times you are applying for the debt but can not get it. In these types of cases, you will get two options to settle the issue. If you need help along those lines, you can turn to the private sector for options such as debt consolidation and debt settlement. 1. Get The Debt Consolidation In a government debt relief consolidation program, you can have loans (including certain forms of student debt) combined into a single loan with fixed interest. From that point on, you'll pay a single monthly fee that will go towards all your loans at once. This is a great option if you have a hard time keeping track of all your payments or are finding yourself buried under interest rates. However, it's important to find a program that is realistic for your circumstances. You could end up in an even worse position than you started if you are unable to make your new payments. The pacers are the most critical factors. Gather the pacers, which you can submit as proof for your words and the circumstances. 2. Settle The Debt Debt settlement involves working with creditors to negotiate a one-time payment in full of satisfying a debt in exchange for interest rate and fee concessions — and sometimes even a portion of the principal amount borrowed. This can be a good option if you are close to or have already defaulted on your government debt relief loans, as most creditors won't agree to settle if you have been consistent with your payments. However, you don't want to purposefully avoid paying your loan off in the hopes of reaching a settlement. Doing so will detract from your credit score, which can affect your ability to apply for other loans or be approved for mortgages in the future. Conclusion: People often feel hopeless when in debt because they don't know they have options. The first step is learning everything you can about your student loans and the services available to you. Knowledge is power, and in this case, it might also be a relief. Government debt relief programs make it easier for you to move on with your life and pursue your dreams so that hopefully, you never have to think about such matters again. Read Also: Need Some Help Saving Money As A Young Professional? Use Mycare To Learn How To Budget! The 8 Smart Tips To Get A Smart Repayment Plan Understanding the Steps in Debt Collection

Credit Card Terms Everyone Should Know

Annual Fee

Credit Limit

Billing Cycle

Due Date

Total Amount Due And Minimum Amount Due

Finance Charges And APR

Use Online Event Payment To Streamline Your Payment Process

Can I Convert My 401k To A Gold IRA?

Abdul Aziz Mondol

Abdul Aziz Mondol is a professional blogger who is having a colossal interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, he loves to share content related to business, finance, technology, and the gaming niche.

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How To Cope Up With Debt For New Residents In Canada

How Money Management And Technology Combine

Government Debt Relief And Student Loans

Credit Card Terms Everyone Should Know

Annual Fee

Credit Limit

Billing Cycle

Due Date

Total Amount Due And Minimum Amount Due

Finance Charges And APR

Share this Article

Use Online Event Payment To Streamline Your Payment Process

Can I Convert My 401k To A Gold IRA?

Abdul Aziz Mondol is a professional blogger who is having a colossal interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, he loves to share content related to business, finance, technology, and the gaming niche.

Leave a Reply

Popular

Follow Us

Recent

Related