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Terms and Definitions
Key Credit Card Terms
Annual Fee- a yearly fee charged by some credit card issuers for processing and maintaining your credit card account.
Annual Percentage Rate (APR)- the yearly interest rate you pay on your balance. Interest rates will vary based on your credit worthiness and the lender.
Cash Advance APR- Card issuers almost always charge a higher interest rate for a cash advance then they do for normal purchases.
Credit Card Limit- the maximum amount that can be borrowed on a credit card without penalty.
Credit Cards with Rewards- a credit card that offers you the opportunity to earn different types of rewards based on your usage and purchases.
Introductory APR- the initial interest rate on some credit card. This interest rate can be as low as 0% and can last for 6 or more months.
Penalty APR- a higher interest rate which usually starts when a payment is late, or a payment is returned. Usually, the borrower is required to make six consecutive payments on time before the interest rate can be returned to the original rate before the penalty was assessed.
Penalty Fees- a fee charged to your account for a variety of reasons including late payment, missed payment, and going over the credit limit.
Maintenance Fees- a monthly fee charged by some credit card issuers for processing and maintaining your credit card account.
Variable APR- The interest rate changes as the prime rate changes, causing the APR to either increase or decrease.