Credit Card Agreement: The Important Terms that You Need to Know
Most people rely on their credit cards as it gives them a sense of purchasing power. However, as you rely on your credit card, you must know that you should be accountable for your spending. For those who have been chasing for the points that they can get, you must examine if your credit card points are costing you. This is because instead of saving, you might end up ripping your finances.
Besides, you should motivate yourself to pay off debt, in a way of paying off more than the minimum every month; otherwise, you might end of drowning in debt and finding yourself seeking ways on how to lower your credit card interest rates.
Credit Card Agreement Terms
Your credit card issuer is obliged to suffice a credit card agreement. This contains the terms of your credit card that are listed below. Getting acquainted with these terms will help you understand how your agreement is in effect and might shun you from living beyond your budget.
Initial Credit Limit
This is the maximum amount or the limit amount that you can spend within a period of 30 days without accumulating any charges. This means if you spend beyond your limit, you’ll be entitled to a penalty fee. So, if you are not a wise spender, you might need to break your poor money habits.
Annual Interest Rate
The annual interest rate is the charges where you pay interest for various types of transactions, like your purchases, or during balance transfers, and other cash-based transactions. Several credit cards imposed sky-high interest rates if you’re unable to pay the minimum every month.
Your grace period is normally 21 days until your payment is due. If you don’t pay your outstanding balance, after the given grace period, you’ll start accumulating interest in your debt. Moreover this can affect your credit rating.
Determination of Interest
Explains whereby how your interest is calculated by the issuer. Several credit cards carry interest according to your average balance on a daily basis. So, to shun incurring interest, you have to ensure paying your credit card balance in full before the given grace period.
This refers to the least amount you can pay to shun being tagged as delinquent. Most credit cards requires a minimum payment that is approximately 2% or $15. If you fail to pay the minimum amount, you’ll acquire an increase in your interest rates or acquires late payment fees or penalties.
Your premium credit cards hold larger reward points; however, it also comes with larger fees. Hence, before applying or signing for a new card, you must know the fees that come with it. In cases where it requires an annual fee, it will be charge on your statement on a yearly basis.
There are extra costs that you can acquire when using your credit card for purchases. These charges include entirely during your credit card balance transfers up to your requests in obtaining an extra copy of your credit card statement.
If you have several credit cards setting in your wallet, there’s a probability that some of it might not be in use. Also, if you think that this will not cost you any penny, you’re absolutely wrong! Say, you have not used your card for a year or depending on the terms of your institution, you’ll be charged for an inactive fee by your card issuer and your rewards points will also be forfeited.
Having the idea of the above credit card agreement terms, you might consider checking your current agreements. It is a must that you get acquainted with what’s in it for you. Besides, it’s better to know these things early rather than when your interest rates are a mountain peak.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.