In the world of credit cards, almost everything that you are told can be confusing or misleading—and that includes ads, promotional offers, the contract you sign and even your monthly statement. And credit card ­issuers like it that way.

Don’t let credit card companies fool you. Here are 10 tricky terms that credit card applicants and users need to ­understand…*

“Grace period.” A credit card’s grace period is the time between the end of its monthly billing cycle and the date when payment is due. Many people think they have “a month,” but by law, grace ­periods can be as short as 21 days. Pay your bill before this grace period ends, and you typically will not face interest charges.

What’s tricky: Grace periods generally do not apply if you carry a “revolving balance” on the credit card—that is, if you failed to pay off the entire balance by the end of the prior billing cycle.

What to do: Pay off your credit card balance in full whenever possible—having even a tiny balance left over at the end of a monthly billing cycle means interest charges will be imposed not only on this balance but also on new purchases made during the following billing cycle starting the day that those purchases are made.

“Due date.” This is the day by which your credit card payment must be ­received.

What’s tricky: If you have been carrying a balance on a card, waiting to pay close to the due date—even if you pay on time and in full—will cost you money. That’s because credit card interest compounds daily, so every day you wait to pay means additional interest.

What to do: If you carry a balance, pay as soon as possible rather than waiting until the due date nears.

“0% interest rate.” Credit card promotions often promise that you will pay 0% interest, usually referred to as an “introductory” rate, for a certain period—which sounds like a no-lose proposition.

What’s tricky: The 0% rate might not apply to both new purchases and balance transfers (see below), and it almost certainly won’t apply to cash advances. If you’re late with a payment, your 0% rate could skyrocket, potentially all the way to a “penalty” rate that could be 25% or higher.

What to do: Read the fine print of any 0% offer so that you understand exactly what this rate does and does not apply to—it can vary widely from offer to offer.

“0% on balance transfers.” This is similar to the 0% purchase rate discussed earlier except that it applies specifically to a balance transferred from a different credit card, not to new ­purchases.

What’s tricky: A 0% balance-transfer rate does not mean a balance transfer will have no cost. Most card issuers impose a “balance-transfer fee,” typically around 3%. The other tricky aspects of 0% rates discussed above apply here, too.

What to do: Use a balance-­transfer calculator (such as to make sure it’s worth paying the card’s ­balance-transfer fee. Or apply for a card that offers an introductory 0% interest rate on balance transfers and charges no balance-transfer fee for some period—a recent example is the Chase Slate card.

“5% cash back.” So-called cash-back cards offer small refunds on purchases, generally 1% or 2%—but card issuers know that there’s something compelling about increasing the offer to 5% back.

What’s tricky: Cards that offer 5% cash back inevitably do so only with purchases in certain spending categories and usually up to a preset limit. Even worse, these spending categories might change every few months, and cardholders might have to contact the card issuer to “opt in” to the savings each time they do. It’s easy to lose track, and lots of cardholders don’t end up getting nearly the amount of cash back they envisioned when they signed up.

What to do: If you don’t want to have to jump through hoops, choose a cash-back card such as Citi Double Cash that offers 2% cash back on virtually all purchases. If you tend to carry a balance, skip rewards cards entirely and instead choose a card that offers a low interest rate.

“Deferred interest.” Retailers sometimes advertise special programs that allow shoppers who use store-­branded cards to pay “no interest if paid in full within six [or 12] months.” These ­“deferred-interest” offers can be a good way to postpone payment.

What’s tricky: If you do not pay off the whole balance by the end of the deferred-interest period, you will be charged interest retroactively to the date of purchase on the entire purchase amount—losing all the advantage of the offer.

What to do: Take advantage of a deferred-interest offer only if you are certain you will pay off the bill in its entirety by the end of the deferred-­interest period. Do not make additional purchases using this store card until you have paid off the deferred-interest purchase. Otherwise your payments to the card issuer might be applied to these additional purchases, making it more difficult to pay off the deferred-interest balance by the deadline.

“Convenience checks.” Credit card ­issuers sometimes send their cardholders blank checks that they can use to obtain cash…pay off other cards’ balances…or make payments in places where credit cards are not accepted.

What’s tricky: If these checks are used to obtain cash or make payments, your credit card’s cash-advance interest rates likely will apply—and these rates typically are very high, often 25% to 30%. You likely will be charged this interest rate starting the day that you use the check with no grace period…and probably will be charged a fee as well, often 5% of the check amount. If the marketing materials provided with the convenience checks cite attractive terms, such as “0% interest,” these terms almost certainly apply only if the checks are used to transfer balances from other cards.

What to do: Understand that the word “convenience” is intended to put you off guard. Do not use convenience checks to obtain cash or pay bills.

“Preapproved.” Consumers often receive marketing materials from credit card issuers informing them that they have been “preapproved” (or ­“preselected”) for a card.

What’s tricky: “Preapproved” does not mean that you already are approved to receive the card. If you apply, you still could be rejected or approved under less attractive terms than described in the marketing. And because applying for a credit card can reduce your credit score, you could lose two ways if you are swayed to apply by a “preapproved” promise.

What to do: Apply for a card because that card offers rates, rewards or other features that are better than the cards you already have, not because an issuer tells you that you’re preapproved.

“Foreign-transaction fee.” Most credit cards impose a fee, often between 2% and 4% of the purchase, when transactions are made outside the US.

What’s tricky: Foreign-transaction fees can apply even to purchases made in the US if the company you buy from is based abroad—as many Internet retailers are.

What to do: Use a card that charges no foreign-transaction fees at all. These include cards issued by Capital One, Discover and certain cards from other issuers.

“Currency conversion.” When you use a credit card to pay for something in a foreign country or to buy from a merchant in a foreign country when you are in the US, the merchant might offer to convert the purchase into US dollars as part of the purchase transaction rather than have the credit card issuer do the conversion.

What’s tricky: If you agree to this currency conversion, the merchant likely will charge you a fee and/or impose an unfavorable exchange rate. You might end up paying 3% to 7% more than you expected—and that’s on top of any foreign-transaction fee that might be charged by your card issuer.

What to do: Just say no when asked by a merchant whether you want a purchase converted into US dollars. Your credit card issuer will automatically convert the purchase into dollars on your credit card statement at a more favorable rate.

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