Do you know how you are billed by your creditors?  What's an 'APR'?  Do you understand the 'grace period'?  Here is a list of the terms and conditions you find on a typical statement:

• APR.  The annual percentage rate is the yearly interest rate you pay on any outstanding balance.
• Credit available.  The amount still available after the lender deducts the amount you already owe on the card.
• Credit line.  The maximum amount you can owe at any time.  If you go over your credit-line limit, you may have to pay a fee.  You may also trigger a higher interest rate.
• Grace period.  The period of time during which you may pay for your purchases in full without being charged interest.  Usually this is 25 days, but it's getting shorter—in some cases 20 days.  For example, if the billing date on your credit card is Sept. 1, you have until Sept. 21 to pay your entire bill.  That does not mean mailing it on the 20th.  Your payment has to reach the credit card company by the due date.
• Late-payment charge.  If your payment arrives after the grace period, you may be charged a late fee.  If you don't pay on time, late fees are not the only punishment you face: Almost three-quarters of issuers impose a higher interest rate (also known as a default or delinquency rate) on customers who make one or more late payments.  For example, if you make two late payments within six months, that 15 percent rate you are paying could jump to 24 percent.
• Minimum payment.  The percentage amount of the balance that must be paid monthly in order to not be in arrears.  For many cards, that rate is as low as 2 percent of the unpaid balance.

On the back of the bill you should find which method is used to calculate the interest rate you are charged:

• Fixed rate.  The rate remains constant until the credit card issuer gives written notice of a change.  By federal law, issuers must notify consumers before changing the fixed interest rate. 

But did you know you could reject the new rate?  If the card issuer is based in Delaware, you can opt not to sign off on the changes.  You have to let the issuer know in writing before any due date specified in your notification.  Doing so effectively closes the account, but you can continue to pay off the balance under the old terms.  Signing off like this doesn't work with a variable-rate card.

• Tiered rate.  Different rates are applied to different levels of your outstanding balance.  For example, you may be charged 15 percent interest on the balance up to $1,000 and 18 percent on the amount over $1,000.
• Variable rate.  The interest rate is subject to change depending on the index used by the issuer.  Some of the common indexes are the prime rate or Treasury bill rates (one, three or six months).

Most important, realize that when you use a credit card you are getting a loan. If your credit card is not paid off in full each month, you incur a finance charge.

The following are four methods used to calculate finance charges:

• Average daily balance.  This is the most commonly used number for determining interest charges.  It's determined by adding each day's balance and then dividing that total by the number of days in the billing cycle.  The daily balance includes the current outstanding balance plus any new charges and minus any payments or credits.
• Adjusted balance.  This is figured by subtracting the payments you've made from the previous month's balance.
• Two-cycle average daily balance.  The balance is calculated by averaging the daily balances for two consecutive months.
• Previous balance.  The finance charge is based on the amount owed at the end of the previous billing period.