DEFINITION of 'Terms And Conditions (Credit Card)'

A formal statement of the rules and guidelines that govern the relationship between a credit card issuer and a credit card holder. A credit card’s terms and conditions spell out the fees and interest charges you could incur as a cardholder. This document provides the credit card’s annual percentage rate (APR) for purchases, APR for balance transfers, APR for cash advances and penalty APR. It also states how long the grace period is, what the minimum interest charge is if you carry a balance, the annual fee, balance transfer fee, cash advance fee, foreign transaction fee, late payment fee and returned payment fee.

BREAKING DOWN 'Terms And Conditions (Credit Card)'

In addition to providing dollar amounts and percentages for fees and interest rates associated with a credit card, the terms and conditions also describe how the credit card company will calculate your balance (e.g. using the daily balance including current transactions method), what actions will trigger the penalty APR (e.g. missing the minimum payment deadline), and how the company will apply payments to your account (e.g. it might apply payments to your lowest APR balances first, up to the minimum payment due, then apply payments to the highest APR balances). If the credit card has a rewards program, the terms and conditions (or sometimes a separate document) will explain the basic rules of the rewards program, including the types of transactions that earn rewards (for example, purchases but not balance transfers). If the credit card has a promotional offer, such as a sign-up bonus or low introductory rate, the terms and conditions will also describe how to qualify for the offer.  

The document containing a card’s terms and conditions sometimes goes by a different name, such as “disclosures,” “rates, rewards, and cost information,” or “pricing and terms.” A credit card’s terms and conditions will be available when the consumer applies for the card. It will also be mailed to the consumer when a new card is issued. Consumers should read the terms and conditions carefully before applying and again upon receiving the new card to make sure they fully understand any fees and interest charges they might incur. Consumers should also read the terms and conditions to make sure they understand how to qualify for any promotions and rewards associated with the card.

RELATED TERMS
  1. Upfront Pricing

    The interest rates and fees stated in a credit card agreement ...
  2. Credit Card

    A card issued by a financial company giving the holder an option ...
  3. Purchase APR

    The annual percentage rate that applies to outstanding balances ...
  4. Minimum Payment

    The smallest amount of a credit card bill that a credit card ...
  5. Credit Card Balance

    The amount of charges, or lack thereof, owed to the credit card ...
  6. Fee Harvesting Card

    Credit cards targeted at consumers with poor credit scores that ...
Related Articles
  1. Personal Finance

    Everything You Need To Know About Credit Card Rates

    Understanding credit card rates will help you choose the right credit card, and avoid any unpleasant surprises.
  2. Personal Finance

    Best Credit Card Features For Students

    Students should look for credit cards that charge no annual fees, have a low introductory interest rate and offer rewards or money.
  3. Personal Finance

    Best Credit Cards for 2017

    If you have good credit, card companies are competing for your business. Here are some of this year's best deals and credit cards you should look at.
  4. Personal Finance

    Should You Use Credit Cards To Fund Your Business?

    We give you 4 reasons to consider using a credit card instead of a business loan to fund your business, and how to be smart about it.
  5. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  6. Personal Finance

    8 Considerations For Using Your Credit Card Abroad

    How to choose the right credit card to take on your next international trip and what to expect when you use it.
  7. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are 5 times you shouldn't pay with a credit card – and 5 times you should.
  8. Personal Finance

    How Is Cashback Profitable For Credit Card Companies?

    Cashback rewards are not as beneficial to the consumer as they might initially seem.
RELATED FAQS
  1. What's the difference between a balance transfer and a cash advance?

    Learn how balance transfers and cash advances differ, how these transactions can both benefit and hurt your finances, and ... Read Answer >>
  2. How can I avoid paying unnecessary credit card fees?

    Examine different strategies for reducing fees on credit cards. Learn about the Consumer Financial Protection Bureau and ... Read Answer >>
Trading Center