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Do you have a charge card account? Chances are, if you are over the age of 18 and currently reside in the United States, you do! As a matter of fact, the average consumer in the United States not only has a charge card but has hundreds or even thousands of dollars in charge card balances. Surprising? Well, it usually doesn't come as much of a surprise. What is very surprising however is the response that I get from people when I tell them that their credit cards have more than one interest rate! Although, most Americans use credit cards, the vast majority of them don't understand the interest rates they are paying and how the interest rates are applied to their balances! Now, that is quite shocking! With that said, for those consumers who don't know much about charge card interest rates, here is a list of interest rates that you might be being charged and how they work: Standard interest rates: The first interest rate that I'm going to talk about is one that people probably already know about. The standard interest rate on a credit card account is the only one that many consumers think that they pay. However, this interest rate only applies to standard purchases. This includes purchases such as groceries, gas, entertainment and anything else that consumers would purchase on a regular basis. However, this interest rate does not apply to all balances. Cash advance interest rates: The next interest rate is one that many Americans don't know about until it is too late. Thinking that the standard interest rate applies to their entire balance, quite a few Americans decide to use their charge card account for ATM transactions, wire money transfers and cash back at grocery stores. Unfortunately however, these types of purchases require that Americans pay a higher cash advance interest rate in most cases! This is why it is a best practice for consumers to not use charge cards for cash transactions. Balance transfer interest rates: Because of the overwhelming demand for charge card accounts amongst Americans, quite a few banks started offering these products. This lead to a rise in competition. Looking for a way to catch the attention of Americans, lenders created balance transfer charge cards that would allow people to use them to pay off charge card account debts held by other lenders. These transactions are normally charged the balance transfer interest rate which is normally either the same or lower than the standard interest rate for the credit card. Promotional interest rates: Due to the overwhelming competition in the charge card account industry, along with balance transfer charge cards came promotional interest rates. Promotional interest rates are very low, even 0% interest rates that last for the duration of the promotional period. Promotional periods always start the date the charge card is activated however, the term of the promotional period can range from 6 to 18 months in most cases. Also, the promotional interest rate may apply to all or simply a portion of consumers balances depending on the promotional offer. It is important to read the terms and conditions when Americans are interested in a promotional charge card account. Default interest rates: Finally, the default interest rate is one that consumers never want to pay. It's by far the highest interest rate on any charge card account and, for good reason! This is the interest rate that will apply to all balances on a charge card account should Americans default on the account. Defaults include late payments, spending more than the credit limit, ect... I hope you enjoyed my explanation of credit card interest rates! Please come back and read more of my articles soon! This article is brought to you by: JEMCreditCards.com: Skymiles Credit Card Offers Compare Credit Card Offers
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