Credit Card Help: Frequently Asked Questions


Credit card offers land in your mailbox on a daily basis. You are barraged with offers for “No Interest,” “Rewards,” and a myriad of other incentives to entice you to complete and send in their application. But with all that credit card information directed at you, do you really understand the fine print?

Credit card companies try to make it easy for you to apply, but you should understand all the options in their brochure jargon and lingo. It’s likely you have many questions about those applications, and here is a list of important FAQs you should know before filling out another credit card application:

What is an APR?
The APR is the annual percentage rate, or the interest rate that the credit card company charges you. Different APRs may apply to different balances on your account, such as your balance on purchases or your balance on cash advances.

What is an Introductory APR?
The introductory APR is a low promotional interest rate (such as 0%) offered to new credit card accounts. An introductory APR lasts a limited time.

What is a Purchase
A purchase is the use of your card to buy or lease goods or services. The purchase of cash or cash equivalents, like casino chips or lottery tickets, is a cash advance, not a purchase.

What is a Balance Transfer?
If you already have a credit card with a balance, you can transfer that balance to a low interest credit card. Many credit card companies offer balance transfer incentives, such as low or 0% interest, to encourage you to sign up with them. Balance transfers can work in your favor if you are approved for a credit card with a lower interest than the current card which holds your existing balance. Before you do your next balance transfer, read our guide on balance transfers.

What is a Cash Advance
A cash advance is usually when you use your card or account to:

  • obtain cash from an automated teller machine (ATM); or
  • obtain cash from any other source; or
  • make a wire transfer; or
  • buy foreign currency; or
  • buy traveler’s checks; or
  • buy money orders; or
  • buy lottery tickets; or
  • buy gambling chips and wagers; or
  • cash an access check.

What is in Default
You are usually in default on the account if:

  • You do not make any payment when it is due; or
  • You have exceeded one or more of your credit limits; or
  • A payment you make is rejected or cannot be processed; or
  • You provide false, misleading, or fraudulent information; or
  • You fail to comply with any term of the contract; or
  • You are bankrupt or insolvency proceedings are filed against you; or
  • You are unable or unwilling to pay your debts; or
  • You die or are legally declared incompetent or incapacitated; or
  • You are using your card for illegal or fraudulent purposes.

What is a Due Date
This is usually the day by which your credit card issuer must receive your payment in order for it to be timely. Your due date is on your bill.

It will fall on the same calendar day of the month. It will be at least 21 days from the date that your credit card issuer mail you the bill, and at least 25 days from the end of your most recently ended billing period.

To be timely, your credit card issuer must receive your payment on or before the due date and by the time stated on your bill. If no time is stated on the bill, your payment is timely if we receive it by 5 pm (in the time zone in which the payment is received) on the due date.

If your credit card issuer does not receive the minimum payment by the required date and time, your payment will be a late payment. If you pay more than the minimum payment by that date and time, you will pay less in interest charges. If you pay your balance in full, you may be able to avoid certain interest charges if your contract provides for a grace period.

What is a Grace Period?
A grace period is a period of time during which you can avoid paying interest on certain transactions. Your agreement will define what kinds of transactions may be subject to a grace period.

Usually, if certain transactions are subject to a grace period, your account starts in a grace period. You will keep that grace period if you pay your full balance on time every month. You will lose your grace period if you do not pay that full balance in a given month. To regain your grace period thereafter, you must pay your full balance on time for the number of billing periods stated in your agreement.

Usually, if you lose your grace period, for transactions to which the grace period previously applied, you will owe interest on any unpaid balance. Interest on those transactions will begin to accrue from the end of the billing period for which you failed to pay the full balance. For any such transactions that you make after you lose your grace period, you will pay interest from the transaction date until such time as you regain a grace period for transactions of this type.

What is a Foreign Currency Transaction
Foreign currency transactions are usually purchases and/or cash advances that you make in a foreign currency.

The card network that processes these transactions will calculate a U.S. dollar amount for each such transaction using its own currency conversion procedures. The type of card you have determines which network does the conversion. Each network uses either a government-mandated or wholesale rate in effect on the date that the network processes the transaction, which may differ from the rate that the network itself receives and which may be the least favorable rate the network identifies from a reasonable range of customary sources. The rate in effect on the processing date may not be the same as any rate in effect on the date that you made the transaction or on the date that the transaction posts to your account.

What is a Late Payment
A late payment is one that you make that does not reach by or before the applicable time and due date identified on your bill.

What is a Minimum Payment
You may pay all or part of your account balance at any time. However, you must pay at least the minimum payment on your bill by the due date each month.

This guide is not meant to replace or supplement your existing credit card contract. Please refer to your credit card contract / agreement.


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CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.