Learning any new language can be fun and educational, but if there is room for only one language at the top of your must learn list—make it PlasticSpeak. After almost twenty-five years helping people with their financial affairs, I have found credit card offers and credit card statements seem to be written in a language all their own. There is a lot of valuable information if you understand the language. If you do not, though, the fine print can lead to big, ugly debt problems.

Federal regulators know how dangerous credit card fine print can prove to consumers' financial health, and the government has recently approved a set of sweeping reforms. Now, there is even more reason for you to become fluent in PlasticSpeak. While there is not space in this article to discuss all the facets of credit card statements, I will focus on a few of the most important.

You learned English starting with the ABC's, but PlasticSpeak begins with ADB (Average Daily Balance). ABD is the method credit card companies use to calculate your payment due. Each day's balance is added to the balance of all of the other days in the cycle (usually a month), and that total is divided by the number of days resulting in the average balance.

ADB is one of the main areas of PlasticSpeak that is being changed by the new law. Under the current system, credit card issuers often use a "double billing cycle." Let us say, for instance, at the end of January you paid off the entire balance on your card and have a zero balance due. When you received your February statement, the finance charges would reflect the average outstanding balance for February and January. Under the current laws, you would end up having finance charges for a month when you had paid off the entire balance. Under the new regulations passed in December (they take effect in July), finance charges are computed based on the current cycle only.

Now that you understand ADB, the next thing to learn is that the credit card company multiplies that number by 1/12 of APR (annual percentage rate), to figure out how much interest you will be charged for the month. I must warn you—APR is not quite that simple. Many credit cards have different rates for different types of purchases. For example, cash advances (money you get from an ATM or special credit card checks you write) will typically carry a higher charge than regular purchases. Balance transfers (debt you moved over to the credit card from another credit card account) might be under a special low-rate offer for the first three to six months. This means that the credit card statement may reflect three or four different APRs.

The new regulations have something to say about these different APRs. The law used to state that any money you pay over and above the minimum amount would go toward the lowest rate balance first, with the higher APRs carrying over to the next month, compounding all the way. Under the new law, payments in excess of the minimum must go to the balance with the highest interest rate (or at least will be divided proportionately among all outstanding balances).

If you have a credit card with no ADB (meaning you paid off the card at the end of the cycle), then you may be eligible for a no APR grace period. From the day you make a transaction using your card, there is an interest-free time, usually twenty to thirty days. Grace periods are available only if you have a zero balance on your card from the last cycle; otherwise, interest charges begin immediately with each purchase.

Now you know your ADBs, your APRs and a grace period when you see one you have been officially introduced to PlasticSpeak. By monitoring your credit card accounts, you will be taking another step to protect your finances and your family. You will have plenty of opportunities to practice your new language skills while going over your next credit card statement. What a sense of accomplishment you'll have when you realize, for the very first time, your credit card statements, fine print and all, actually make perfect sense.