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Do you have any more question on the basics of what happens? Here are the answers to some commonly asked questions about Canadian credit cards.
What is an APR?
An APR, or annual percentage rate, is how much you pay for the convenience of credit on a yearly basis. It is usually comprised of an interest rate plus finance charges. APR's can be fixed or variable and come in different forms, such as purchase APR's, balance transfer APR's, cash advance APR's, etc.
What do I do if I think my Canadian credit card has been stolen or used fraudulently?
If you see a suspicious or unauthorized charge on your card, the first step is to contact the merchant where the amount was charged. Often, unauthorized charges are simply mistakes. If the merchant cannot resolve the issue, the next step is contact the card issuer as soon as possible. Talk to the fraud department.
What's the difference between fixed and variable-rate APR's?
Variable rate APR's fluctuate according to the prime rate, which is published in the Wall Street Journal. This rate is often used to determine the rates on short-term loans. If prime rates are declining, it is a good idea for consumers to go with variable rate APR Canadian credit cards. If prime rates are on the rise, however, stick with fixed rate APR cards. Fixed rate APR's are much more stable than variable rate APR's, but the bank can still change the rate periodically.
In the event my card is lost or stolen, for how much of the charges am I responsible?
This will largely depend on the issuer of the card. Some issuers have a "zero liability" policy on Canadian credit cards, meaning you will not be responsible for any portion of the fraudulent charges if they are reported promptly. Other card issuers might make you responsible for the first $50 of the charges. Read your card agreement for details.
What happens if I pay late?
This will also depend on the card's issuer and the terms of your agreement. Generally speaking, you will be assessed a late or penalty fee, the late payment will be reported as a derogatory item on your credit report, and your APR might rise to the penalty/default APR specified in your card agreement.
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