Annual Fee: Some credit card issuers charge an
annual fee to help offset costs that they incur in maintaining
Percentage Rate (APR): The yearly interest rate
or percentage that the cardholder pays on their outstanding
balance in the form of interest.
Balance: The amount owed by the cardholder to the
Transfer: The process of moving an unpaid credit
card balance from one issuer to another, usually to a card with
a lower annual percentage rate to lower interest charges.
Using a credit card to obtain cash on the spot at a bank or an
ATM. The amount of the cash advance is deducted from the
cardholder's available credit line. A fee is often charged when
obtaining cash advances. In addition, the interest rate is
usually higher than on purchases and there is typically no grace
Credit Bureau: An agency
that checks credit information and keeps a complete file on
people who apply for and use credit.
The record of how a consumer has paid accounts in the past, used
as a guide in deciding whether the consumer's credit worthiness.
Credit Limit. This is the maximum amount you can
borrow using your card.
Credit Rating: A financial
institution's evaluation a person's credit worthiness. Credit
ratings are based on the person's history, capacity to repay,
agrees to repay any credit card debt if the applicant cannot.
This is usually a parent or other family member or a close
between a lender and a borrower whereby a lender lends money to
a borrower, and the borrower agrees to pay it back.
A type of
payment card that involves a revolving line of credit that is
issued to the cardholder. They provide flexibility, allowing you
to pay your whole bill at once or over time in increments. If
you do not choose to pay your balance in full each month, you
will be required to make at least the minimum payment and to pay
finance charges on the remaining balance. Credit cards are
issued by banks, credit unions, and some retailers like
department stores and gasoline companies, among others.
to as your credit limit. This is the maximum amount you can
borrow using your credit card.
is computed based on information in your credit report and helps
lenders to make judgments about granting you a loan or a credit
card. Negative information on your credit report can lower your
credit score and harm your ability to get future loans, rent an
apartment or even get a new job.
Debit and ATM cards are types of payment cards that provide a
convenient and secure alternative to cash and checks. They allow
you to make a purchase and to access your bank accounts anywhere
through the use of an ATM machine.
Charges: The price paid to a lender for the use
of borrowed money. Interest is charged as a percentage of your
outstanding balance (purchases and charges reduced by payments
or credits posted). This percentage, or interest rate, can vary
from card to card.
An APR that does not change in response to interest rate changes
A period of time — usually 20-25 days — when you're not charged
interest for purchases you've made. For example, if the billing
date on your credit card bill is May 1 and you have paid your
prior balance in full, you may have until May 20 to pay your new
balance in full. If you do, you will not be charged interest. If
your payment arrives after May 20 — or if you don't pay the
entire balance — you may be charged interest from the date of
purchase as posted. Some accounts have no grace period, which
means interest is charged on purchases from the date they are
Interest: The fee paid for
the use of money. Interest may be paid, for example, by an
individual to a bank for credit card use, or by a bank to an
individual for holding a savings account. Interest is expressed
in terms of annual percentage rate (APR).
Introductory Period: The time period during which
the Introductory Rate applies to balances outstanding on your
Rate: A special APR that applies for only a
limited period of time. Sometimes also called a teaser rate.
provide a credit line to a consumer through a payment card are
called issuers. Issuers can include banks, credit unions or
savings and loan associations, and retailers such as department
stores or gasoline companies.
Banking: Online systems allow customers to plug
into a host of banking services from a personal computer by
connecting with the bank's computers over the Internet.
Program: A point accumulating program based on
purchases or transactions made on your card. These points can be
redeemed for the particular program you enrolled in (e.g.
airline, gasoline, etc.) Banks may charge annual fees to
participate in rewards program.
Secured cards are a great first step for those with little or no
credit history. This type of card requires that a security
deposit be made in order to establish a credit line. Your credit
line will typically be equal to the amount of your deposit.
Fees and Other Charges. A card may include other
costs. Some issuers charge a fee if you use the card to get a
cash advance, make a late payment, or exceed your credit limit.
Some charge a monthly fee whether or not you use the card.
Variable Rate: An APR that periodically goes up or
down based on fluctuations in market interest rates as reflected
in a published index (e.g., the prime rate published in the Wall