Periodic rate this is the daily rate of interest you

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Periodic rate. This is the daily rate of interest you will pay on your outstanding card balance. It is calculated by dividing a card’s APR by 12 months. For example, if a card has an APR of 18 percent, its periodic rate is 1.5 percent. Although when expressed as a periodic rate, a card’s rate of interest may not seem high, if you maintain a balance on the card from month to month, the amount of interest you pay will really add up over time. Grace period. This is the amount of time you will have to pay your full credit card account balance be- fore interest will start accruing. Some cards have no grace period. That means that even if you pay the 144
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Using Credit Responsibly card’s full balance by the due date, you will still be charged interest. The interest rate for credit card cash advances is almost always higher than the one that applies to purchases. Also, most card issuers begin charging interest on a cash advance as soon as you receive it. Balance calculation method. This is the method used by a card issuer to calculate the amount of interest you will pay on your account balance each month. There are six different methods and some of them will cost you more than others. From the least expensive method to the most expensive balance calculation method, they are: —Adjusted balance —Average daily balance excluding new purchases —Previous balance —Average daily balance including new purchases —Two-cycle average daily balance excluding new pur- chases —Two-cycle average daily balance including new pur- chases Fees. The more fees that apply to a card and the higher the fees, the more it will cost you to use it. The fees may include: —An annual fee for the right to use a card —A late fee —A fee for exceeding your credit limit Warning 145
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Credit Hell —A balance transfer fee —A cash advance fee To ensure that you get the best deal possible on a credit card, take time to read and compare the terms of various credit offers you receive in the mail or learn about on the Internet. Don’t rely on a credit card company’s marketing flyer or letter, which are intended to point out a card’s good points and gloss over its negatives. However, “the devil is in the details” and you will find those details in the fine print. Be proactive when you shop for credit. Don’t as- sume that the offers that arrive in your mailbox are the best ones you can qualify for. Instead, go to and . Each web site features information about good deals on credit cards. You can also call CardTrak at (800) 344-7714 to order a list of low interest credit cards. When you shop for a credit card offer, avoid cards that: Charge you a fee each time you use them. Charge you a fee for not using your card enough.
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