The Vocabulary of Credit Cards



The Vocabulary of Credit Cards

Affinity Credit Card - credit card offered jointly by two organizations, a credit card issuer and a professional association, special interest group or other non-bank company.

Annual Fee - yearly fee paid to use some credit cards.

Annual Percentage Rate (APR) - cost of carrying a balance on a loan for a year, equal to the amount owed in interest each month multiplied by 12.

Available Credit- credit limit minus the current balance.

Balance- total amount of money owed, including any unpaid balance from the previous months, new purchases, cash advances, and any charges.

Balance Transfer - moving balances from one credit card to another.

Bankruptcy - legal declaration of the inability to repay debts, viewed as a last resort.

Billing Cycle - number of days between the last and current statement dates.

Billing Statement - monthly bill from a credit card issuer that shows activity on an account.   

Cardholder Agreement - issuer’s written statement of terms and conditions relating to a credit card account. 

Cash Advance - instant loan from a credit card account. 

Cash Advance Fee - fee for cash advances in addition to normal interest charges.

Charge Card - card requiring full payment of the balance by the due date.  

Consumer Credit Counseling Service (CCCS) - non-profit organization that provides free or low cost counseling and guidance to people experiencing financial difficulty. 

Co-signer - person who signs a credit card agreement with the primary applicant and is also responsible for repaying the balance of the debt.

Credit bureaus or credit reporting agency (CRA) - company that collects and sells information about how people manage their debts.

Credit Card Debt - total unpaid balances on all credit cards. 

Credit History - record of the way people manage their debts.   

Credit Limit - maximum amount you may owe on a credit card including purchases, cash advances, finance charges and fees.  

Credit Management - way a person handles the money they borrow from banks or credit issuers.

Credit Report - information about how you pay bills and loans, how much credit you have, what your debts are, and other personal information to help lenders decide whether you are a good or bad credit risk.

Credit Score - three-digit number ranging from 300-900, determining your ranking for credit risk.

Debit Card - card allowing purchases to be paid for with funds immediately deducted from your financial account.

Debt - amount of money owed.  

Deferred Payment - payment put off to a future date or extended over a period of time.

Delinquent Account - payments have not been made according to the terms and conditions of the cardholder agreement.

Due Date - day a payment is due to a creditor. 

Finance Charges - total amount paid to use credit including interest, all fees, premiums, etc.  

Fixed Interest Rate - interest rate changing only if the issuer notifies cardholders through an amended cardholder agreement with at least 15 day’s advance notice. 

Grace Period - interest-free time between the date of purchase and when that purchase appears on their statement if there’s no outstanding balance on a credit card. 

Interest Rate - fee charged for money loaned.

Joint Credit - credit based on the assets, income and credit history of both people applying.

Late Payment - payment received after the due date.

Late Payment Fee - fee charged when a payment is received after the due date.

Minimum Monthly Payment - smallest amount that can be paid by the due date and still meet the terms of the cardholder agreement. 

National Foundation for Consumer Credit (NFCC) - non-profit organization dedicated to educating consumers in wise use of credit.

Outstanding Balance - total amount owed on a credit card or loan.

Over-the-Credit-Limit – owing an amount greater than the limit on a credit line. 

Over-the-Limit Fee - fee charged for exceeding the assigned credit limit.

Past Due - when the minimum payment has not been received by the due date.

Periodic Rate - interest rate in relation to a specific amount of time.

Posting Date - date that a purchase, cash advance, fee, service charge or payment is recorded.

Previous Balance - total balance due at the end of last billing cycle.

Rebate Card - credit card that supplies benefits based on the card’s usage.   

Revolving Credit - credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card and have credit available again as the balance is paid off.

Secured Card - credit card guaranteed by a cash deposit held in a special savings account or certificate of deposit. 

Transaction Date - date a purchase is made or cash is withdrawn.

Transaction Fee - charge for credit activities such as using an ATM or cash advance.

Unsecured Credit Card - card not guaranteed by collateral.

Variable Interest Rate - interest rate that changes based on an economic index such as the prime rate.

Zero Balance - total outstanding balance paid with no new charges or cash advances during a billing cycle.

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