Understanding Business Credit Card Terms

by : Devin Gilliland

Credit card terms are easy to learn and understand. Any one who owns a credit card or plans to get a credit card for the first time must be familiar with credit card terms. One must not apply for a credit card unless he is fully qualified with credit card terms, especially when it involves your business.

Anyone who does not understand how credit cards work must first make himself familiar with the credit card terms, including, how to purchase items with it; how to read monthly billing statements and fully understand the rules of payment. However, it is not very difficult to learn about using credit card responsibly.

For a new credit card owner, reading the credit card literature and dealing with credit card purchases is not an easy task. Hence, achieving and keeping a good credit score, and getting into a large and unmanageable amount of dept, depends upon how good a credit card owner understands the terms associated with the credit card. As a business owner you should understand how debt may affect your business; however it is also true that some savvy business persons choose to use credit cards to create short term liquidity. This should only be done by someone who firmly knows what they are doing.

Average Daily Balance

Balance on the credit card divided by the total number of days in that particular month is average daily balance. This average daily balance is then used for interest calculations which are charged to the credit card holder on each month's bill.

Annual Percentage Rate

Some times referred to as APR, is the annual percentage rate on a credit card. In other words it is the amount that must be paid by the credit card holder as the interest rate. This interest rate is paid in addition to the cost of purchases made through the credit card.

Balance Transfer

Transferring balance from one credit card to another is called balance transfer. Credit card holders use balance transfer to lower interest rates on their balance.

Finance Charge

It is the amount of money that the card holder must pay in addition to the total due for purchases. This amount is calculated by interest rate and the purchase balance on the card.


This term is seen on different mails sent to the people. This term indicates that the particular recipient has a good chance of getting a credit card. But it is does not guarantee that the recipient will get a credit card.

Variable Interest Rate

This is the percentage that the credit card holder must pay in order to retain credit card balance. This interest rate is variable because it depends upon the current national interest rate level.

Card Holder Agreement

The detailed terms and condition of the credit card, including the interest rate associated with the card, its description, other fees and charges etc.

Minimum Payment

Every month the credit card holder receives a bill. This bill also specifies a minimum payment, which must be paid in order to retain credit card. This is usually a very small amount. Monthly bill indicates the purchases, the card holder has made the previous month.

There are many other credit card terms which are not covered in this article. This article only focuses on important terms. To see the details of these terms and all the other terms, one can always search the internet.