Don’t let confusing credit card terminology cause you to choose the wrong card – or even worse, loose precious travel funds to some bank.
Here are some common terms you will encounter when trying to choose credit cards for travel:
The APR (Annual Percentage Rate) is the amount that will be added to unpaid balances. Fixed rates are better and stay the same until the bank sends out a notice. Variable rates “float” with the market and may be higher or lower from one month to the next. The rate will never go below the “floor” rate which will be outlined in your agreement.
Cash Advance Fee
The fee added to your balance every time you use your card to get cash from a bank/ATM machine.
This is the lowest amount that you can pay monthly without putting your account into “default” and damaging your credit. The minimum balance is often 2% of the balance, making it impossible to get out of debt by only paying the monthly minimum (because of interest).
The cost of owning a particular credit card. The annual fee is added to your balance every year. Many cards with significant travel rewards charge an annual fee – however if you travel enough the rewards may outweigh the cost.
The amount of interest free time you are allowed between making a purchase and the billing date. Usually between 20 – 30 days.
A fee that may be applied if you transfer your balance from one card to the other. This keeps people from hopping balances around to take advantage of low introductory APR rates.
International Exchange Fee
Some cards may charge 1 – 3% for purchases not made in your native currency while you are traveling internationally.