Understanding Credit Card Jargons

Credit improvement is only possible if one understands the ins and outs of the credit world

. People who want to perform a do-it-yourself credit repair end up facing a blank wall as they don't know where and how to start. The key towards credit improvement working on every details where improvements is possible and there is no better way to start with your credit improvement task other than by starting from the bottom- and that is understanding basic words regularly used in the world of credit and finance.

Affinity Cards- this is a type of credit card that gives out a certain amount to a charity that you choose. The amount that they send to your chosen charity depends on your spending. This type of card is more like a conscience clearing card where you get to feel good after spending as you get to help people in need. But if your goal is credit improvement, it is best to avoid charities that lure you into signing for these types of cards. You don't want to end up with high interest rates in exchange of guilt.

Annual Percentage Rate (APR)- to put it simply, this rate is your overall interest rate as calculated every year. It is also given as a small percentage of your existing balance.

Automated Teller Machine (ATM)- this cash machine is where you get or put your funds. Most of the time people use this to withdraw funds. But it this service does not come for free. When you put your card into the machine, the amount that you want to withdraw is produced but they also charge you an extra amount as a service fee.

Balance Transfer- this takes place the moment you decide to transfer existing debt balance from one credit card to another. This is one of the most common credit improvement tactics as transferring your existing debt from a high interest card to a much lower interest card will give you a chance to pay a much lower interest rate thus you end up saving a lot in the process.

Credit Limit- this is the maximum amount that a credit holder is permitted to spend or get out of the card. Maxing out on your credit limit means you will be charged with an over the limit fee or worst, your credit card will no longer be accepted. If you are into credit improvement, stick to your credit limit as it can do wonders to your credit report.

Fixed Rate- A fixed rate card is one where you are given a rate when you sign up for the card and that rate, at least in theory, stays the same for the whole time you have the card. In practice, though, interest rates can be changed for almost any reason.

Grace Period- is the actual amount of time in between spending the money that you borrowed and paying its interest rates. Grace period of different credit cards may vary, there are those who have two months grace period and there are those with one month grace period and so on. If your goal is credit improvement, you need to be very particular with the grace period as late payments can hurt not only your credit report but your pocket as well.

Minimum Payment- A minimum payment is the absolute lowest amount you can pay back to the credit card company each month you should pay more, but you don't have to. Minimum payments are usually around 2% of your existing balance.

There are other credit card jargons which are not yet mentioned here. But if you are serious about credit improvement, you need to take these jargons seriously. Arming yourself with knowledge in dealing with your credit card issue squarely will give you confidence as well as great chances of wining in your bad credit battle.

Understanding Credit Card Jargons

By: Louie Pinto

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