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The fine print

Understanding the terms and conditions of your credit card is important in order to maintain your financial health. The terms and conditions will vary depending on your credit card issuer, but we'll explain basic terms and conditions in this section. You also can call your credit card issuer if you have any questions about your terms and conditions.

Annual percentage rate

The annual percentage rate varies by credit card. Many card issuers will offer introductory offers as low as 0% for a limited time, but you could jeopardize that offer if your payment is ever late or your account goes over your credit limit. Remember that rates that are "too good to be true" usually expire after a short time and much higher rates then go into effect.

Grace period for purchases

The grace period varies from 20 days to 25 days depending on the card issuer. The finance charge applies after the grace period ends if the balance isn't paid in full.

Annual fee

Many card issuers do not charge an annual fee, but it's always a good idea to see if the card issuer does before you accept the credit card offer.

Minimum finance charge

If you carry a balance on your credit card, you will accrue a finance charge. Depending on the interest rate and your credit card company's policy, you will be charged a certain percentage of the outstanding balance (and sometimes a percentage for any new purchases as well).

In the case of a very small balance, a minimum finance charge will be billed to you instead of the actual interest rate. In other words, if you had a balance of $5 on your credit card and the finance charge is 4% of your total balance, you will not be charged $ .20, you will be charged a minimum of $ .50. The minimum finance charge for most credit card companies is somewhere between a total of $.50 to $1.

Always investigate your card's minimum finance charge because it can add to your monthly balance. Please read your service agreement for details.

Transaction fee for cash advances

You'll want to keep your cash advances to a minimum because several additional fees can be attached to this transaction, such as teller fees and transaction fees up to 3%. In most cases a grace period will not apply to the transaction.

Over limit fee

Having your credit card balance over the limit can cause problems too. Card issuers can charge you up to $29 every time your card is over the limit, and sometimes paying only the minimum balance will not put you back under your credit limit. Avoid spending to your credit limit on any account. Not only do you risk over-limit charges, but using all (and more) of your available credit is viewed negatively by lenders.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
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