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Credit Card Dictionary

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A

Account Number
A unique number given to a person. Your account number is the same as the credit card number
Additional Card Holder
Allows you to add a family member to your credit card. They have access to the same credit limit and interest rate that you do.
Annual Fee
A fee charged by a credit card every year for the right to use the credit card. Some credit card companies will remove an annual fee if you call them, and tell them you will cancel your card if they don't remove the annual fee.
Annual Percentage Rate (APR)
Interest shown as a yearly rate.
Average Daily Balance Method
A way to calculate interest for a billing cycle. It is calculated by adding every day's balance and dividing that number by the number of days in the billing cycle. Then it is multiplied by the monthly interest rate. The final number is the amount of interest a person owes for that billing cycle. This is only used if a person does not pay their full balance.

B

Balance
The amount of money on a credit card that a person has left to repay.
Balance Transfer
Moving a credit card balance from one card to another usually done when a bank offers a special interest rate on a transfer. For instance when you apply for a new credit card they may have an offer for 0% interest rate on balance transfers for 6 months.
Balance Transfer Fee
A fee charged for transferring a credit card balance from one account to another. Usually the fee is 1% to 5% of the total balance transferred. Not all credit cards have this fee.
Billing Cycle
A period of time between credit card bills usually a month to 25 days.
Billing Statement
A monthly credit card bill that shows a person's balance, due date, finance charges, payments, purchases, and rewards.

C

Card Holder Agreement
The printed agreement that states the terms and conditions of a credit card account. The cardholder agreement is required by Federal Reserve regulations. It must include the annual percentage rate, the monthly minimum payment formula, annual fee if applicable, and the cardholder's rights in billing disputes. Changes in the cardholder agreement may be made, with written advance notice, at any time by the issuer. Rules for imposing changes vary from state to state, but the rules that apply are those of the home state of the issuing bank, not the home state of the cardholder.
Cash Advance
An instant loan from a credit card company. The advance is charged interest the day it was requested until it is paid off. A cash advance usually has a higher interest rate than regular purchases and some credit card companies charge a transaction fee.
Cash Advance Fee
A fee charged when a person uses their credit card to receive a cash advance. This fee is either a percent of the amount received or a flat rate. Please check your credit card agreement to find the terms of your cash advance fee.
Cash Back
A credit card company pays a card holder a percentage of the purchases they make usually between %.05 to 5%.
Chargeback
A customer disputes a charge on their credit card, and the credit card company removes the charge from the customers bill and charges the merchant for the purchase.
Charge Card
A card that does not charge interest, but the balance must be paid in full every month.
Compounding Method
The way a credit card company figures the interest rate.
Consumer Credit
A loan that is given to a person for personal use.
Credit Balance
Amount of money a bank owes to a customer. This can happen when you buy something and return it. The merchant then credits your card the price.
Credit Bureau
A business that records people's credit habits including; number of credit cards, payment habits, balance on credit cards, and employment history. A person has the right to see their credit file.
Credit Card Number
An exclusive number assigned to each card.
Credit History
A record of a person's debt and repayment of debt.Credit Limit - the maximum amount a person can borrow from a credit card.
Credit Rating
A rating based on a persons ability to pay interest and repay a credit card balance.
Credit Report
A document that lists a person's credit history. This can include; credit, employment, residence, judgments, tax liens, bankruptcies or similar matters of public record entered against the individual.

D

Debit Card
A plastic card that a bank issues that allows a person to withdraw money from an ATM.
Debt Consolidation
Instead of paying off several bills a month, this allows a person to only pay one bill.
Defaulted Account
Is a credit card account when the customer has not kept their end of the agreement to the contract. A record of defaulted accounts is kept for six years after the customer breaks the agreement.
Delinquent Account
Means a customer fails to repay any of their balance in three months, or a customer has been late on a payment for three months in a year.
Dishonored Check
Payment has been denied to the person trying to cash the check.

E

Express Cash
A special program offered by American Express that allows you to use your credit card at ATMs.

F

Finance Charge
Fees charged to a person's credit card for interest, late, over the limit, cash advance, or balance transfer.
Fixed Interest Rate
An interest rate that remains the same even if the prime rate changes. A credit card company can still change a fixed interest rate, but to do so they must tell you they are changing the rate.
Floor
The lowest rate possible for a variable interest rate. Even if the prime rate drops the interest rate will never go below the floor rate.
Foreign Spending
When you make a purchase in a foreign currency; the charge will automatically be converted to your country's currency by the rate of exchange on that day.
Fraud Protection
Protects your credit card incase it is lost or stolen. You will not have to pay for any unauthorized purchases. Please read your credit card agreement to find the exact conditions of your fraud protection.

G

Grace Period
An amount of time after the billing cycle a person has to pay off their balance before they are charged interest. If a person carries a balance there is no grace period. A grace period is usually 20 - 30 days long.

H

At this time we do not have any definitions for the letter H if you would like to recommend a word please contact us.

I

Identity Theft
The act of stealing an individual's personal information to steal their credit cards, bank account, and other finances. An identity thief will take your social security number, birth date, address, name, and bank account information.
Interest Rate
The percentage rate that is charged to unpaid balances
Introductory Rate
The starting interest rate for a new credit card usually only lasts for three to six months.
Issuer
A financial institution that provides a credit card.

J and K

At this moment we do not have any definitions for the letter J or K. If you would like to suggest a word please contact us.

L

Late Fee
A charge received from missing the payment due date. If a person is mailing a payment they should mail it at least 5 days before the due date.
Life of the Balance
An interest rate that is applied to a balance until it is paid off. The interest rate will not change.
Line of Credit
The amount of credit extended from a lender to a borrower. In the case of a credit card, it is the maximum you can charge to your card.

M

Minimum Finance Charge
The interest applied to your balance is under $.50 you will be charged $.50 in interest. If you do not pay your balance in full, but only have a small balance remaining you will probably receive a minimum finance charge. Many credit cards have a one.
Minimum Payment
The least amount a person must pay a credit card company for their statement.

N

At this time we do not have any definitions listed for the letter N.  If you would like to recommend a word please contact us.

O

Offline Debit Card
A new form of debit card that either has VISA or MasterCard logo and can be used anywhere a VISA or a MasterCard can be. This card does not have a line of credit it deducts the payment from a person's checking account.
Online Statement
A credit card statement that can be viewed over the Internet. Please refer to statement for more information.
Outstanding Balance
The amount of money a customer owes to a bank. This includes the principal and interest.
Over the Limit Fee
A charge for exceeding the limit of your credit card.

P

Periodic Rate
The interest rate for a specific amount of time usually either monthly or daily. It is determined by dividing the Annual Percentage Rate by the amount of time. For months Time = 12 and for days Time = 365. Personal Identification Number (PIN) - a number code used like a password. You use this number to get cash from ATMs, and when you are talking to a customer service representative they may ask for your PIN for verification.
Pre-Approved
A person has only passed a preliminary screening. It does not mean a person is guaranteed a credit card.
Previous Balance
A way credit card companies determine how much interest is owed. It is the previous balance multiplied by the interest rate.
Previous Balance Method
same definition as previous balance.
Prime Rate
The interest rate offered to the creditors best customers.

Q

Currently we do not have any definitions for the letter Q. If you would like to suggest a word please contact us.

R

Recent Activity
Purchases a person makes after the billing cycle is over. These purchases will be included in your next billing cycle.

S

Secured Card
A type of credit card that is linked to a bank account. A person's credit limit is based on how much money they have in their bank account. This card is ideal for people who have problems spending more than they can pay off.
Settled Account
Means a customer has repaid their credit card balance.
Skimming
The act of copying one credit cards magnetic strip information onto a different credit card. If a person has purchases on their statement that they know they didn't make they should contact their credit card company immediately.
Statement
Shows your balance transfers, finance charges, interest rate, payments, purchases, and rewards for last month's billing cycle. A statement is usually mailed to a person every month.

T

Teaser Rate
Also called the introductory rate, this is the below market interest rate offered when a person first applies for a credit card.
Transaction
The act of purchasing an item, receiving a cash advance, transferring a balance, or making a payment. Your transactions are listed on your monthly statement.
Two Cycle Average Daily Balance
When figuring the interest on a credit card. The company will take the average of the last two billing cycles. If a person has this on their credit card they should switch cards, because you will pay a lot more in interest than a credit card that uses average daily balance to figure the interest.
Two Cycle Billing
Means the same thing as two cycle average daily balance. You should find a credit card that uses average daily balance to calculate interest. To find out which method your credit card company is using you need to look at your statement or your contract. If you still can't find it you can call the company and they are required to tell you.

U

Right now we do not have any definitions for the letter U. If you would like to recommend a word please contact us.

V

Variable Interest Rate
The interest rate on a credit card that fluctuates based on the prime rate.
Void
To invalidate. When you void a check, you are canceling the check so no one can cash it. When you void a credit card transaction you are reversing the transaction.

W, X, Y

Sorry but we do not have any terms for the letters w, x, or y at this time.

Z

Zero Balance
When a credit card customer's bill has been paid off and there are no new charges during that billing cycle.

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