"Annual Fee" A flat, yearly charge similar to a membership fee, usually $25 to $50 A flat, yearly charge similar to a membership fee, usually $25 to $50
"Annual Percentage Rate" The APR is the measure of the cost of credit expressed as a yearly rate. The APR is the measure of the cost of credit expressed as a yearly rate.
"Finance Charge" The dollar amount you pay to use credit, includes interest costs and all charges associated with the transaction. The dollar amount you pay to use credit, includes interest costs and all charges associated with the transaction.
"Grace Period or Free Period" The grace period is the number of days you have before a credit card company starts charging interest on new purchases. Not all credit cards have a grace period. The grace period is the number of days you have before a credit card company starts charging interest on new purchases. Not all credit cards have a grace period.
"Periodic Rate" The interest rate the card issuer applies to your outstanding account balance to figure the finance charge for each billing cycle. The interest rate the card issuer applies to your outstanding account balance to figure the finance charge for each billing cycle.
"Transaction Fees" Some credit card issuers charge a fee for a cash advance, a late payment or going over your credit limit. Sometimes there is a monthly fee if you did not use the card. Some credit card issuers charge a fee for a cash advance, a late payment or going over your credit limit. Sometimes there is a monthly fee if you did not use the card.
"Calculation of Finance Charges" It is very important to know how the interest rate is calculated to compare and select the best credit terms. The credit card issuer will use one of three methods. You can decide which method is best suited to your payment style. The method used can make a big difference in the total amount of money you pay in finance charges. This is especially important when the APR's are identical for several credit cards. There can be a significant difference in the total amount of finance charges depending on the balance computation method used. It is very important to know how the interest rate is calculated to compare and select the best credit terms. The credit card issuer will use one of three methods. You can decide which method is best suited to your payment style. The method used can make a big difference in the total amount of money you pay in finance charges. This is especially important when the APR's are identical for several credit cards. There can be a significant difference in the total amount of finance charges depending on the balance computation method used.
"Average Daily Balance Method" This is the most commonly used method. You are given credit for your payment from the day the credit card issuer receives it and the interest is calculated on the basis of the average amount owed during the previous month.
"Adjusted Balance Method" This method is the most beneficial to the consumer and produces the lowest finance charges. The balance is calculated by subtracting the payments and any refund credits from the balance you owe at the end of the previous billing period.
"Previous Balance Method" This is the most expensive method. The finance charge is calculated on the balance owed at the end of the previous billing cycle. Payments, credits and new purchases made in the current billing cycle are not included.
source: http://www.in.gov/dfi/education/choosecd.htm
