CREDIT CARDS » Credit Card Rates

For many people, the terms used by credit card companies can be bewildering.

Whats the difference between your annual percentage rate and your daily periodic rate? Or your monthly finance charges, or your average daily balance? Well, take heart and be of good cheer, for here is a handy glossary of terms for your reference. The next time you view your credit card statement, you'll know what all of these things are:

The Annual Percentage Rate (APR)

This is the interest rate you are paying on your credit card, as expressed in an amount you will pay annually. In reality, of course, your interest is compounded more often than once a year.

Monthly and Daily Periodic Rate

Usually your annual percentage rate is calculated as either a monthly periodic rate or a daily periodic rate. It's an important component of your monthly finance charge calculation, since the higher the percentage of your interest rate is, the more your credit is costing you.

Average Daily Balance

This figure represents the average of your balance over the course of the month, and is the other major factor that comes into play when calculating your monthly finance charges. To calculate the amount of interest you are paying every month, the credit card company typically multiplies this figure by your periodic rate to come up with your finance charge.

For example, let's say that in the month of January, your average daily balance on your credit card is $1000. Your APR is 12%, which is calculated at a daily periodic rate of .03288%. There are 31 days in the month, so your finance charges for the month of January would be:

$1000 (ADB) x 12% (APR) x 31 days = $11.02.

Annual Fee

You credit card may also charge you an annual fee. Annual Fees are a membership fee, separate from your annual percentage rate, which may be charged in addition to your other finance charges, late fees or overlimit fees. Check with your credit card company to see what type of annual fees your card may have.

As technology advances, so do the ways that criminals commit crimes.Credit card fraud for online purchases alone topped $4 billion in 2008. One crime that is on the rise is credit card fraud, but there are some simple steps consumers can take to help prevent them from becoming the next statistic.

How to Prevent Fraud

• When you get a new credit card in the mail, immediately sign the box on the back as most vendors match that signature with the one on your driver's license
• If you are dining out and pay by charge card, keep and eye on your credit card at all times as it makes its way around the dining room so you can see if someone is illegally copying down or swiping your number
• If you are making a purchase by phone, do so in private so no one has the opportunity to memorize your credit card number
• Do not give out your credit card number to anyone you did not initiate the call to
• Do not email your credit card number, especially if the request for your information is solicitedvia an email as it may be a phishing scam
• Always check your credit card statements when they come in to verify if the charges made were actually yours
• Know where your card is at all times and if you have multiple cards, lock the ones that you are not currently using in a safe

By being an alert and cautious consumer and credit card holder, you can help slow the increase in credit card fraud. Make sure to be aware of your surroundings when you are out, store your credit card safely when not in use and check your credit card statements for accuracy. By following these and all the previously mentioned tips you can help protect your financial well being.

Are you looking for a low interest credit card? If so, Go Banking Rates can help.

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