Debt Consolidation

Credit card companies, as part of the financial industry, use a massive array of jargon. If you understand the terms you can stay on top of your credit card debt. While you can't be expected to recognize all the technical terms, some of them are quite important so here is a quick guide, in alphabetical order.

Affinity card
This is a credit card that gives a certain amount to a charity of your choice, depending on how much you spend. It is generally best to avoid any charity that wants you to sign up for such a card and dont let guilt lead you to a high interest rate.

APR
Annual Percentage Rate. This is your overall interest rate, calculated yearly, and given as a percentage of your credit card debt balance.

ATM
Automated Teller Machine. A cash machine. It will give you money when you put your credit card in, but will probably charge an extra fee.

Balance transfer
This is when you transfer your balance from one credit card to another. The usual reason for this is to try and keep as much credit card debt as possible on a lower-interest card.

Credit limit
Your credit limit is the maximum amount you can spend or withdraw from your card. Going over your credit limit will result in your card no longer being accepted and you being charged an over-limit fee.

Fixed rate
A fixed rate card is one where you are given a rate when you sign up for the card and that rate, at least in theory, stays the same for the whole time you have the card. In practice, though, interest rates can be changed for almost any reason.

Grace period
Your grace period is the amount of time between when you spend money and when you start paying interest on it. Good cards can have a grace period of up to two months and bad ones might not have one at all.

Minimum payment
A minimum payment is the absolute lowest amount you can pay back to the credit card company each month on your credit card debt. You should pay more, but you dont have to. Minimum payments are usually around 2% of your balance.

Sub-prime
This is a phrase used in the industry to describe customers who are a bad credit risk, but are seen as worth lending to anyway. If you are identified as sub-prime, youll start getting offers for loans secured on your property. They know that if you cant pay your credit card debt theyll get their money anyway.

Teaser rate
A special offer low rate, usually written in enormous letters. You will see many offers with LOW 4.9% APR in inch-high letters, followed by for first six months, 21.9% thereafter in microscopic ones. Teaser offers can sometimes be worth taking, but not if they tie you in for longer than the period of the offer.

Variable rate
This is an interest rate that is worked out by adding a certain amount to the current base rate. Taking this option will allow your credit card debt to be affected by changes in national interest rates. Its a good idea if you think rates might go down, and a bad one if they are on the way up.

The more informed you are the better control you will have over your credit and you credit card debt. To find out more about hidden fees, charges and costs buried deep in your credit card agreement and shift the financial powere from the credit card companies to you.

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