Q: What are the three different types of interest?

A: A lot of people think credit cards only have one interest rate. In fact, each card can have up to three:

Interest on Purchases - The interest rate charged on purchases made using the card. When a credit card companies advertise their card's interest rate, this is usually the rate that they're advertising.

Interest on Cash Advances - Almost all credit cards let you "withdraw" money from your card by using an ATM/ABM. They sometimes charge a different (usually higher) interest rate on money you withdraw from your card than on purchases.

Interest on Balance Transfers - When you switch credit cards, you can transfer the outstanding balance on the card you're switching away from to your new one. Credit card companies often offer people a lower rate on balance transfers than on purchases and cash advances in order to entice people to switch away from another company's credit card to their own. Normally this lower rate on balance transfers only lasts for a few months (around six) but in a few cases it's permanent.

Q: What's a grace period?

A: The grace period is how long after your monthly statement is printed you have to pay for purchases made on the card before interest starts being charged on them. Remember that it's how long you have after your statement is printed, not how long you have after you receive your statement (the date of printing is stated on the statement). If the grace period on your card is 20 days, and your statement was printed on March 30th, you would have until April 19th (20 days after March 30th) to pay for your purchases or interest will start being charged. However, the grace period only applies under certain circumstances.

Q: What are those circumstances?

A: First, the grace period only applies to purchases. It doesn't apply to cash advances or balance transfers. Interest starts getting charged on those right away. Secondly, in order to have the grace period apply for purchases, you have to "qualify" by keeping your balance paid off. Each credit card listed on this site has a "Grace Eligibility" listed. Those that say "One-month balance paid" require you to pay off your entire balance by the due date printed on your statement for the grace period to apply. For those that say "Two-month balance paid", you have to pay off this months balance by the due date and you have to have paid off last months balance by last month's due date or the grace period will not apply. If you don't meet the requirement for the grace period to apply, interest starts being charged on new purchases as soon as you make them.