Credit cards are widely used for millions of transactions worldwide on a daily basis. It enables the card holder to buy now and pay later at one’s ease. However if you are new to credit cards or are planning to get one it’s a good time to understand all the technical jargons that are involved in day to day usage of a credit card. As we aim to raise awareness and guide our readers to the fullest hence we will list the most used terminologies with simple explanations that are easy to comprehend by anyone having little or no knowledge about banking and financial products.
An annual percentage rate (APR) is the yearly rate that is charged for borrowing, shown as a fixed percentage that represents the actual annual cost of funds over the term of a debt. This includes any fees or additional charges associated with the transaction.
Some specific credit cards come with cash back offers. What this essentially means that if you spend a specific amount within a month on a specific service such as grocery or fuel, then you’ll get a fixed percentage of discount on your total spending on that specific service.
Credit Card Number:
This is the 16 digit unique card number written on the front of your card. It’s used to perform transactions online as you need to enter your card number along with the CVV code.
CVV is the abbreviation for Card Verification Value. This is the 3 digit code written at the back of the card usually written near the magnetic stripe. To perform any transactions/make any purchase online, you have to enter the CVV code along with the credit card number.
This is the maximum limit a card holder is allowed to borrow on a single card. Credit limit is usually dependent upon certain factors such as a person’s credit rating and salary etc.
This is the amount that’s due on a card holder that is payable within the grace period. If not payed within the due time then it’s subject to applicable interest as well.
Interest Free Period:
Also known as Grace Period, this is essentially the number of days within which if you clear your outstanding balance then you’re not subject to any interest. This period starts from the time of your transaction.
Also called as minimum amount due, this is the least amount that you have to pay off from your outstanding balance along with the sum of interest, fees and various charges that are levied on your credit card usage.
Online banking means being able to access your transaction history, account details and outstanding balance with the facility of being able to pay your dues online. This is something to consider while getting a credit card as it makes things easier to manage.
Personal Identification Number is the number used to complete a transaction when the card is swiped at a Point of Sales.
We hope that this write up simplified many of the technical terms used in relation to credit cards. If you have any comments or feedback please write to us at: firstname.lastname@example.org