Understanding Credit Rates and Terms If you are applying for a credit card, or if you already have a credit card it is important to understand all the issues that face you and your credit rating for a solid credit rating into the future. Here we are going to present you with a few terms involved in using your credit card, how your credit card works and when you follow the regulations regarding your credit card how your credit rating is going to reflect these actions. Credit Rates You are going to hear about credit rate, interest rates, and card rates every time you see a commercial for a credit card, when you see your credit card statement and when you inquiry with a financial institution of any type about a credit card. The credit rate is the interest rate that you pay on purchases that you do not pay off within thirty days of your purchase. This is the fee that you pay for accessing your credit line, for using money that is not yours but that you are going to repay. Credit Terms Each financial institution sets their credit terms. Credit terms are the limit that you are allowed to charge, and the time frame that you have to pay back the amount that you purchase using your credit. Additional credit terms could apply, be sure to read all information that is sent to you along with your new charge card so you can fully understand your own credit terms. Additional credit terms could include information about what your rights are and what the financial institutions rights are when you fail to make payments. Paying on time When you make a purchase using your credit card, you will have a set time frame to pay this amount back without having to pay any additional interest fees (based on the credit rate for your credit card) but when you pay off the entire purchase amount before the accrued time frame for your interest starts you are ahead of the 'game'. When your credit card holder sends you a statement, paying the bill within the stated time frame you will be paying on time. This gives you a good credit rating, which is a great start in building your financial future. When you are behind on payments Your credit card statement arrives in the mail, but you do not have the money to pay this bill at this time. Paying your bill late, you are already into the next cycle of the credit card, and your interest rates are building means now you owe even more than you originally did (based on your interest rate and the amount that you charged on this card). Paying late payments on a credit card will be reflected on your credit history. Many financial institutions report monthly on credit card holders who are late in paying their bill. How to change your credit history When you receive a credit card for the first time, you may have a higher interest rate or a lower limit on the purchases that you area allowed to make but you can change this. Over the course of six months, a year and then beyond that as well, financial institutions will review accounts and look for credit card holders who have made all their payments on time, for credit card holders who pay a little more than the minimum every month, and for credit card holders who pay off their monthly balances for each statement. When you meet these conditions even one of them continuously you may be eligible for a change in your interest rate, in your credit line amount or in a combination of both. This is a result of your changing credit rating on your history. Because you prove that you can pay your bill on time, pay more than the amount due or when you pay off the amounts that you purchase every month you are going to be rewarded.

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