Credit Card Glossary Terms: Part 1

Glossary Part: 1 | 2

It’s a good idea to always check your credit card status. Make sure you know what your current balance is, know what you spend on and never, ever miss a payment. If you max out your credit cards, your credit score will suffer and you may not be able to make more than just the minimum payment. If that happens, you’ll be bombarded with late fees, over-the-limit fees and default interest rates. When it comes to credit cards you want to make sure you always pay off your balance, don’t spend more than your credit limit and try to keep your balance below 50% of your available credit. To help you understand how credit card works and also help you pick out one that fits your needs best, here’s a list of popular credit card terms from Debt-Meltdown.com:

Annual Percentage Rate or APR: The interest rate charged on credit card balances expressed in a standardized, annualized way. This rate is applied each month that you have an outstanding balance.

Available Credit: The amount that is available to be charged to a credit card amount, in other words, the difference between the credit limit and outstanding charges on the account.

Balance Transfer: This happens when the outstanding balance of one credit card (or several) is moved to another credit card account. This is often done by consumers looking for a lower interest rate. Balance transfers usually have fees.

Collection: It’s an effort by a collections department or agency to get a past-due debt repaid. Having a debt in collections shows up on credit reports, and badly damages the ability to borrow at reasonable rates.

Credit Limit or Credit Line: It’s the amount of money that can be charged to a credit card account. How much credit limit, and how much of it has been borrowed, have a large influence on consumer credit scores. Low credit utilization, a credit limit on which little has been borrowed, leads to a higher credit score.

Debt Consolidation: It’s the combination of multiple loans with a new, single loan offering a lower monthly interest rate and payment, or a longer repayment period. In the context of credit card debt, this often involves a balance transfer from several high-interest cards to a single lower interest card.

Default: To fail to make a payment on a debt by the due date. If this happens with a credit card, creditors might raise interest rates to the default (or penalty rate) or decrease the line of credit. In case of serious delinquency, the card issuer can even take legal action to enforce payment or to garnish wages.

If you or someone you know is going through a tough time paying off their credit card debt and can make their monthly payments, maybe it’s time to reach out to a debt consolidation company like Debt-Meltdown. Debt-Meltdown offers debt consolidation, debt payoff and debt counseling services to those in need. We’ll help you avoid bankruptcy and turn your numerous debts into one lower manageable payment you can make every month. Don’t get yourself in more debt, go to Debt-Meltdown.com and fill out our pre-qualification free confidential consultation form and get started towards a healthier financial situation. Or if you choose to speak to one of our representatives, call Debt-Meltdown at 1-888-258-8478.