ZelphinaCredit cards explained: APRs, grace periods and fees
What the numbers on a credit card offer mean and how to compare cards before you apply.
Key points
- A credit card can have several APRs: for purchases, balance transfers and cash advances, plus a penalty rate if you pay late.
- If you pay your full statement balance by the due date, most cards give you a grace period, so new purchases do not accrue interest.
- Check the fees in the card's terms: annual fee, late fee, balance transfer fee, cash advance fee and foreign transaction fee.
- Applying for a card usually means a hard inquiry on your credit report.
How credit card interest works
A credit card lets you borrow up to a credit limit and repay over time. If you carry a balance from month to month, the issuer charges interest based on the card's APR. Many cards have different APRs for different kinds of transactions: one for purchases, one for balance transfers and one for cash advances. Cash advances usually have a higher APR and often no grace period.
If you are more than 60 days late on a payment, the issuer can raise the rate on your balances to a penalty APR. Paying at least the minimum on time every month protects your rate and your credit history.
The grace period
The grace period is the time between the end of a billing cycle and the payment due date. Most cards offer one for purchases: if you pay the full statement balance by the due date, you avoid interest on those purchases. Issuers are not required to offer a grace period, so check the card's terms.
Fees to compare
| Fee | When it applies |
|---|---|
| Annual fee | Charged once a year just for having the card. Some cards have none. |
| Late fee | Charged when the minimum payment arrives after the due date. |
| Balance transfer fee | Usually a percentage of the amount you move from another card. |
| Cash advance fee | Charged when you use the card to get cash, on top of the cash advance APR. |
| Foreign transaction fee | A percentage of purchases made in a foreign currency or processed abroad. |
Promotional rates
Some cards offer a low introductory APR on purchases or balance transfers for a set period. When the promotion ends, the regular APR applies to any remaining balance. Note the end date and plan to pay down the balance before then.
How to choose
- If you usually pay in full, focus on the annual fee and the rewards or features you will actually use.
- If you sometimes carry a balance, focus on the purchase APR.
- If you travel, check the foreign transaction fee.
- Read the card's pricing table (the Schumer box) before you apply; it lists the APRs and key fees.
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