But do you honestly understand the rates and all the terminology that goes along with your credit card? Understanding all the rates, is the first step in gaining control of your debt and the first step in cutting down those interest charges.

The easiest way to cut your credit card costs is to switch to a card with a lower interest rate. But before you start to do that you should make sure you understand all the terms and regulations that go behind every card. For example do you know how finance charges are calculated? If the answer to this question is no, keep reading.

Cash advances:

Simply stated this is a loan against your credit card. This loan is usually transacted through an ATM machine. There is also usually a special fee added on when using this feature. The fee is based on a percentage of the amount your borrowed. Usually this fee is 2 to 3 percent.


The interest rate on cash advances are also usually higher than normal purchases.

Some credit card companies charges a minimum cash advance fee as high as $5. If you borrow $20 you will be charged $20 plus the additional $5. There is also usually no grace period for cash advances. This means you pay interest starting on the day you borrow the money until you pay it off completely.

Grace Period:

Most credit card offer this service. Simply stated it is the time you have to pay off your purchases before you have to pay any interest. Usually the time is 25 days. When you buy something you will not be charged any interest for that purchase until your next billing cycle. If you pay for it during your current billing cycle you will be charged no interest at all. Check your contract to see what your grace period is for your credit cards. Each credit card company is different and some does not offer this service. You should try to make sure your current credit card companies do offer it. It is a great way to avoid interest payments and to save money.