When you apply for a credit card, you will be given one to two pages of the terms and conditions of the company. A lot of us are guilty about this; we just most of the time sign the contract or the agreement without even reading the fine print. You’d say it is too long and there is really nothing important than you need to know than their rates and charges. This attitude sometimes leads to misunderstanding and conflict at times.

On the fine print, you will encounter a number of jargons and these words are there for a reason so leaving it unread before signing should be a no-no.

All credit card companies reserve the right to do any changes as often as they want even without notifying their customers. You can’t complain about this since you signed the agreement. Reading the terms and conditions is then very important so in case there is something that you do not like about the policy, you can always back out rather than being subject of regular company policy change.

One of the most common terms that you see in the agreement is the annual fee. Any credit card user of course knows what this is. If you apply for a rewards credit card then the annual fees are usually higher. But you should also be careful on this. Do the math. Make sure that the rewards that you will be granted will be higher then the annual fee or else this may not be a good option.

The grace period given by credit card issuers are varying. Some will give a customer twenty days to pay his dues while others a month. When dues are not paid within the grace period given then this will be subject to an inter4est charge. So it is best to pay on time and save your money for more important things.

Another term that may confuse first-time cardholders is the penalty fee. Some mistake it as the interest charge. These two terms are two different things. While interest rate is the fee which is applied on the existing balance, the penalty fee is the amount you are charged of for making a late payment. So the next time you see these terms on your credit card bill, you don’t need to call your credit card company representative to explain what they are for and why they’re there.

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