What Are Credit Card Terms and Conditions?

Terms and conditions for a credit card are the formal statement of rules and guidelines that govern the relationship between a credit card issuer and a credit cardholder. All the details about a card's interest rates, fees, and reward structure are listed in the document.

Types of Credit Card Terms and Conditions

Terms and conditions for a credit card spell out the fees and interest charges you could incur as a cardholder. Here are some of the common terms you'll find in the document:

• Annual percentage rate (APR) for 澳洲幸运5官方开奖结果体彩网:purchases: This is the rate you're charged over the course of the year for buying things or services with your credit card. It includes interest and fees.
• APR for 澳洲幸运5官方开奖结果体彩网:balance transfers: A balance transfer fee is a percentage a lender charges to transfer existing debt over from another institution. Typically, it's the fee to move debt from one credit card to another.
• APR for 澳洲幸运5官方开奖结果体彩网:cash advances: Cash that you access through your credit card is usually charged at a higher interest rate.
• Penalty APR: This is the higher rate you'll pay, usually if you miss the minimum payment deadline.

You'll also learn about conditions surrounding the card, with details like:

• 澳洲幸运5官方开奖结果体彩网:Grace period: This is the number of days between your card statement date and payment date when interest isn't accruing.
• 澳洲幸运5官方开奖结果体彩网:Minimum finance charge: This is a fee you may be charged if the interest due on your outstanding balance in any given month falls below a certain amount. 
• Annual fee: In addition to the APR, your card issuer might require you to pay a 澳洲幸运5官方开奖结果体彩网:year🥃ly fe🔯e in order to have the credit card.
• Additional fees: You'll see the charges for balance transfers, cash advances, foreign transactions, late payments, and returned payments.

If the credit card has a rewards program, the terms and conditions, or sometimes a separate document, will explain the basic rules of the rewards program, including the types of transactions that earn rewards—for example, purchases—and the ones that don't—balance transfers, for instance. If the credit card has a promotional offer, such as a sign-up bonus or low introductory rate, the terms and conditions will also describe how to qualify. 

In addition to providing dollar amounts and percentages for fees and interest rates associated with a credit card, the terms and conditions also describe how the credit card company wil🐻l calculate your balance, meaning whether they will be using the daily balance, including the current transaction method.

The terms and conditions document also explains hoꦓw the company will apply payments to your account, including options such as applying payments to your lowest APR balances first, up to the minimum payment due, then applying payments to the highest APR balance.

Example of Credit Card Terms and Conditions

Here is one example of the terms and conditions a credi❀t card ♎agreement may include.

The Citi Simplicity credit card's terms and conditions have information on interest rates and interest charges, which includes the APR for purchases, balance transfers, cash advances, and how to avoid paying interest on purchases (this describes the grace period without naming it). Fees are also covered: the annual fee, transaction fees (for balance transfers, cash advances, and foreign purchases), and penalty fees for returned payment.

In addition, there are sections concerning identity verification (required by the U.S. government to help fight the funding of terrorism and money laundering), which includes your authorization allowing the Social Security Administration to verify your Social Security number); communications with the credit card company; credit report authorization; how your credit limit will be determined; how to add an authorized user; and more.

Special C💟onsiderations for Credit Card Terms and Conditions

You should be able to read the terms and conditions document before submitting a credit card application. After you're approved for a credit card, the issuer should also mail the terms and conditions document to you.

Be sure to read the terms and conditions carefully before applying and again upon receiving the new card to make sure you fully understand any fees and interest charges you might incur. You should also read the terms and conditions to make sure you understand how to qualify for any promotions and rewards associated with the card. Credit card companies can change the terms and conditions of their card agreements, but they generally have to give consumers 45 days' advance notice for significant changes.

The CARD Act's Effect on Credit Card Terms and Conditions

The Credit꧃ Card Accountability Responsibility and Disclosure Act (CARD Ac🧜t) of 2009 helped standardize the terms and conditions of credit cards. It made the language, terms, and disclosure of penalties and fees much more transparent and understandable, both in the initial card agreements and monthly statements. It also mandated the use of 澳洲幸运5官方开奖结果体彩网:Schumer boxes—named for Sen. Charles Schumer, D-N.Y.—as easy-to-read tables that allow consumers to see important 🅠information at a glance and compare different cards' terms.

The Bottom Line

Although it's tempting to skim over the terms and conditions of your credit card, you could be at a disadvantage if you do so. This document gives you essential information about using your card. Plus, if you've got a card that gives rewards, your terms and conditions should spell out exactly how you earn them.