Econ Credit Terms

• Annual fee: A yearly fee charged by a bank just for holding the credit card.

• Late fee: A penalty fee added to your bill if you do not pay by the due date.

• Transaction fees: Extra charges for specific actions, like using an ATM or buying things abroad.

Interest & Rates

• Interest rate: The cost of borrowing money, expressed as a percentage of the total amount borrowed.

• Introductory APR: A temporary, very low interest rate offered to new cardholders for a short time.

• Fixed rate: An interest rate that stays the same and does not change with market conditions.

• Variable rate: An interest rate that shifts up or down depending on market benchmarks.

• Prime rate (or prime): The baseline interest rate banks give to their most creditworthy commercial customers.

• Default rate: A very high interest rate triggered when a borrower breaks the card rules (like missing multiple payments).

Account Rules & Limits

• Credit limit: The maximum amount of money you are allowed to borrow on the card at one time.

• Grace period: A window of time (usually 21–25 days) where you aren't charged interest if you pay your full balance.

• Minimum monthly payment: The smallest amount you must legally pay each month to keep your account in good standing.

Card Types & Actions

• Balance transfer: Moving debt from one high-interest credit card onto a different card, usually to get a lower rate.

• Secured credit cards: A credit card backed by a cash deposit, which acts as collateral and sets your credit limit.

Financial Trouble & Help

• Default: The failure to repay a debt according to the agreed-upon terms.

• Bankruptcy: A legal process for people who cannot pay their debts, offering a fresh financial start but severely damaging credit.

• Credit Counseling: A service that helps people manage debt through budgeting and structured repayment plans.