With so many consumers applying for credit cards nowadays very few actually read or understand the small print found on the back of credit card applications. Before you fill out an application it is very wise to understand what the application is telling you, if not it can be confusing and misleading. Below are helpful terms and definitions which are found on the back of most credit card applications.

1. Annual Fee - A flat yearly charge for the use of issuer's credit card similar to a membership fee.

2. Annual Percentage Rate (APR) - The percentage rate of the yearly finance charge that will automatically come into effect after any introductory period has lapsed.

3. Cash Advance - Cash loans from a credit card, usually obtained through an ATM withdrawal, convenience checks received by the consumer or through bank withdrawals.

4. Cash Advance Fees – Usually higher interested fees which are charged against your card when you borrow cash from a credit card.

5. Finance Charge - The dollar amount you pay to use credit besides interest cost which may include other charges such as cash advance fees.

6. Fixed rate – When the fixed annual percentage rate of the finance charge does not fluctuate during the annual fixed rate period and the interest charged on the balance owed stays constant.

7. Grace period - A time period, usually about 25 days, in which you can pay your credit card bill without a finance charge however only applies if you pay your balance in full each month.

8. Interest - A fee paid on borrowed assets. It is the price paid for the use of borrowed money thought of as “rent of money"

9. Interest Rate - The rate at which interest is paid by a borrower for the use of money that they borrow from a lender which can change over time.

10. Introductory Period - A reduced annual interest rate offered on a new issued credit card in affect for a short period of time.

11. Introductory Rate (APR) - A temporary interest rate a credit card issuer will uses to entice a consumer to open a credit card which carries a much lower than rates available on the open market normally lasting from 6 to 12 months.

12. Variable Rate - An interest rate that is not fixed and is subject to fluctuate up and down.

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