Glossary

Term

Definition

Additional cardholder

Individual authorized by the primary cardholder to make charges to the account and to receive information about it. Ultimate responsibility for payment remains with the primary cardholder.

Adverse action

Refusal by a creditor to grant or increase credit to an individual, or decision to terminate credit, usually based on information gleaned from a credit report. Federal rules require transparency in notification of these decisions, giving the consumer the opportunity to address the root issues.

Affinity card

A credit card carrying the brand identification of an organization which receives a portion of payments made by cardholders.

Annual fee

A fee charged once per year to credit card holders; this may also be called a membership fee or access fee.

Annual percentage rate (APR)

The APR ("Annual Percentage Rate") is the interest rate you would be charged on unpaid balances. It is an "annualized" value, which means you should divide it by 12 to see the approximate amount of interest you would be charged per month.

Application

An application for credit is a form on which a consumer provides personal and financial information required by the lender to determine their level of credit worthiness. Decisions to extend or decline credit are based on part on this information.

Application fee

A fee associated with applying for credit.

Association

A group of banks or organizations that work under a common group of standards and terms to issue credit cards and provide needed processing and payment administration.

Authorization

Credit card authorization is the process by which a transaction is determined to be legitimate under the terms of the cardholder agreement. These terms include cardholder identity, credit limit, transaction type, and purchase amount.

Authorization date

The date and time that a transaction receives authorization from the creditor.

Authorized amount

The dollar amount associated with an authorized charge, which will be added to the cardholder's balance when the transaction posts to the account.

Authorized transaction

Any transaction which has been submitted to the authorization process and been determined to be legitimate under the terms of the cardholder agreement

Authorized user

Similar to Additional Cardholder but without a card in their name, this is an individual preapproved to make charges to the account. This user is not liable for the charges, as that responsibility remains with the primary cardholder.

Automated Clearing House (ACH)

A large group of financial institutions electronically networked for the purpose of processing transfers between them, such as credit and debit transactions, direct deposits, and payroll transactions.

Available credit

Available credit is the difference between a consumer's current outstanding balance and their credit limit.

Average daily balance

Average daily balance is the total of each day's account balance throughout the billing cycle, divided by the number of days in the cycle. This formula is the most common method used to calculate finance charges.

Balance

The balance on an account is the difference between the total amount charged to the account, plus finance charges, and the total payments received.

Balance transfer

A balance transfer is the process of paying all or part of one credit account by charging that amount to another account, usually to reduce interest or consolidate debt.

Balance transfer APR

The annualized interest rate you would be charged on the remaining balance that was transferred to this credit card from another credit card. It is an "annualized" value, which means you should divide it by 12 to see the approximate amount of interest you would be charged per month.

Balance-transfer fee

A flat or percentage-based fee associated with conducting a balance transfer (a balance that was transferred to this credit card from another credit card), charged by the bank extending the credit.

Basis point

A basis point is a unit of measure used to calculate a change in financial terms, such as raising or lowering the interest rate. One point is equal to one one-hundredth of one percent; thus, a rate that has increased by one percent would be said to have risen by 100 points.

Batching

Electronic transactions such as credit card sales are transmitted in groups known as batches; the process of transmitting them to a financial institution or processing center is referred to as batching.

Billing cycle

The billing cycle is the period of time beginning on the first day after your statement date and ending on the next statement date.

Billing statement

A billing statement itemizes all charges, payments, credits, and debits during the billing cycle. It is typically mailed or provided electronically to the consumer on a monthly basis, shortly after the close of the billing cycle.

Blocks

A block, also called a "hold", is a restriction placed on your credit card to ensure that a predetermined amount of reserved funds will be available at a later time or date. Blocks are most frequently utilized by hotels, gas pumps, and restaurants, to guarantee payment of an indeterminate amount prior to providing goods or services. Blocks are released after the final total charge is confirmed and cleared.

Business card (business credit card)

A credit card designed for business travel and expenses, these cards frequently designate the company as the "primary cardholder" who is liable for the charges, rather than each individual user. These cards can also be acquired by individuals to track business expenses separately from personal ones.

CARD Act of 2009

The Credit CARD Act of 2009 was legislation enacted in order to increase transparency in the credit card industry and ensure greater fairness toward consumers including limiting types of fees that could be imposed and requiring creditors to provide at least 45 days' notice before any changes in terms would take effect. The law went into effect February 22, 2010.

Card reader

A credit card reader is a peripheral device capable of reading the embedded chip or magnetic stripe on credit and debit cards in order to transmit charges. This device is often a built-in part of point of sale computer equipment, and a currently growing segment of the market is small portable units designed for tablets and smartphones.

Cardmember

The cardmember is the account holder or authorized user of a credit card.

Cardmember agreement

A detailed written document that defines the financial terms and conditions for use of the account, to which the account holder has agreed. Federal law requires that this document be provided to the card holder and that it disclose all fees, penalties, and interest rates clearly and accurately without any misleading information.

Cash advance

A cash advance is a service provided by some credit cards, permitting the consumer to withdraw cash directly rather than only making purchases. Cash advances are charged significantly higher interest rates than standard transactions.

Cash advance APR

The annualized interest rate you would be charged on any unpaid "cash advance" balance. It is an "annualized" value, which means you should divide it by 12 to see the approximate amount of interest you would be charged per month. (A "cash advance" is a service provided by some credit cards, permitting the consumer to withdraw cash directly rather than only making purchases.)

Cash advance fee

In addition to higher interest rates, cash advances are charged an additional initial fee. This fee is typically a percentage of the amount accessed, subject to a minimum. (A "cash advance" is a service provided by some credit cards, permitting the consumer to withdraw cash directly rather than only making purchases.)

Cash advance rate

See "Cash Advance APR."

Cash back

Cash back is a form of credit card reward program in which a percentage of the total dollars spent on the card will be returned as a credit to the account or provided in a promotional format such as a gift card or credit from a retail location.

Cash-advance fee

See "Cash Advance Fee."

Charge-back

The process by which a credit card provider requests refund from the retailer who processed a transaction later found to be fraudulent or in error.

Charge-back period

The period of time during which the credit card provider is permitted to charge a transaction back to the recipient.

Charge-off

A charge-off is a status assigned to a credit card account that has reached a level of default such that the company has deemed payment of the debt unlikely. This typically occurs after six months of nonpayment.

Chip and pin cards

A credit card that has a computer chip embedded in it in place of a magnetic strip.

Churning

The practice of signing up for credit cards that are offering sign-up bonuses, completing the requirements to receive the bonus, after which the cards are canceled and the process is repeated.

Closed loop

Closed loop cards are limited-value cards that can only be used in a limited number of locations. Gift cards to a specific brand or chain of stores are an example of closed-loop cards.

Co-branded card

Co-branded cards are associated with both the bank issuing the card and a retail brand. These might include transportation brands, retail store brands, and gasoline companies.

Collection

Collection is the process by which a creditor attempts to retrieve overdue payments and prevent a cardholder from defaulting on a debt.

Commercial cards

Credit cards intended for business use. These might be travel-related cards, purchasing cards, corporate cards, or other business-related cards.

Consumer Financial Protection Bureau

A federal "watchdog" agency created in 2010, responsible for overseeing credit cards, student loans, and other consumer financial products.

Co-signer

A person who consents to be legally liable for repayment of credit extended if the primary recipient defaults on their obligation for any reason.

Credit

A legally binding agreement by which one party provides a loan of money or payment for goods or services in exchange for the other party's promise to repay the amount at a later date, usually in installments and with the addition of periodic finance charges.

Credit bureau

A credit bureau is a company that maintains detailed information provided to them about individuals' credit usage, providing this information to creditors upon request, under specific guidelines. Also called a credit-reporting agency.

Credit card

A plastic card utilizing a magnetic stripe or embedded computer chip to contain the identifying information for the account it is linked to.

Credit card agreement

A contract between the credit card company and the consumer, defining the rules and regulations under which the credit will be extended.

Credit counseling service

Credit counseling services assist consumers to reorganize their debt and negotiate with creditors in order to reduce payments and avoid default.

Credit history

A consumer's record of credit extended and timeliness of payments made.

Credit inquiry

A credit inquiry is registered on a consumer's credit report each time they apply for new credit and the lender requests a copy of their credit record. A high number of credit inquiries reflects negatively on the individual's credit score and can adversely affect the consumer's ability to be approved for new credit cards or loans.

Credit limit

The credit limit on an account is the total amount that may be owed on the account.

Credit line

See "credit limit."

Credit obligation

A legal contract or agreement that obligates the borrower to repay a loan or debt instrument.

Credit rating

An evaluation of an individual's credit worthiness. It is calculated based on multiple factors including income, employment record, and payment history.

Credit Repair Organizations Act

Enacted in 1996, the Credit Repair Organizations Act makes it a requirement for any company functioning as a credit repair service to provide contracts in writing detailing the consumer's rights, including the right to cancel the contact within three days of signing/ In addition it bars them from collecting payment in advance of services, and forbids them from making any false or misleading statements.

Credit report

A report detailing a consumer's history of credit extended and payments made. These records are compiled and maintained by credit bureaus, who also provide the information to potential lenders who request this report prior to approving new applications.

Credit reporting agency

See "Credit Bureau."

Credit reporting agency (CRA)

A company that maintains detailed records of individual consumers' credit usage and payment records, providing this information to others for a fee.

Credit score

A numerical representation of your creditworthiness, based on factors such as the number and age of your credit cards and loans, your payment record, and the percentage of your available credit you have utilized. This score is used by lenders when you apply for new credit, and to determine interest rates and the size of the loan or credit line you qualify for.

Credit union

A member-owned financial institution that provides many of the same services as a commercial bank; these services include checking and savings accounts, auto loans, personal loans, and mortgages. Being member-owned, credit unions offer lower interest rates and more flexible options than a for-profit commercial bank.

Credit utilization ratio

The credit utilization ratio compares a consumer's total debt to their credit limit; a favorable ratio is a low one, where there is much more credit available than what has been used.

Credit-limit-increase fee

An additional fee some companies assess if they approve a request for a credit increase.

CVV

CVV ("Card Verification Value") is a three or four digit code printed on credit cards as an added measure of security. It may be printed on either the back or front, depending on the issuer. Other names for these codes are CVV2, CVC2 ("Card Verification Code"), and CID ("Card Identification")

Debit

In a consumer account, a debit is a charge that reduces the positive balance of an account, or the amount of credit available. A debit occurs when funds are withdrawn from a savings or checking account, a purchase charged to a credit card, or a check or debit card used, or a withdrawal made at an ATM.

Debit card

A debit card is linked specifically to a bank account and expenditures are withdrawn from that balance, unlike a credit card for which the consumer is responsible for paying for their purchase at a later date.

Debt

An amount of money owed, either through the utilization of a credit line or credit card, or having taken a loan.

Debt cancellation coverage

A type of agreement under which a bank will cancel all or part of a consumer's debt if a specific event occurs, such as unemployment, disability, or death. These agreements are classified as banking products, not insurance products, and as such are federally regulated.

Debt consolidation

Managing and simplifying multiple debts by paying them off with a single loan or credit card, often at a lower interest rate than all or some of the original ones.

Debt suspension coverage

Temporarily defers all or part of the monthly payment requirement under certain specific conditions such as disability or unemployment. Standard monthly payments resume at such time as the hardship no longer applies.

Debt-to-income ratio

Important in determining eligibility for credit, the debt-to-income ratio is a calculation of the percentage of income is currently committed to debt payments.

Default

Failure to meet an obligation, such as a debt repayment.

Default APR

An increased interest rate applied by a creditor in response to a consumer's failure to abide by the terms of the agreement.

Delinquent account

An account is deemed delinquent when payment is not received on schedule, and a late fee is applied to the account. A grace period of 30 days is frequently applied before reporting the account to credit bureaus as being past due.

Digital wallet

A digital wallet is an electronic or digital system that stores payment methods and identification in secure encrypted form, enabling online transactions to be conducted easily. The "wallet" may reside on the user's device or online on the merchant or portal's servers.

Discharge

In bankruptcy, discharge refers to the releasing of debt. The judge ruling in a bankruptcy case may determine that a portion of the debt does not have to be repaid; that amount is referred to as having been discharged.

Dongle

A small piece of electronic hardware that attaches to another piece of electronic equipment, enabling it to perform additional functions such as audio, video, data, or games.

Dormant account

An account that has had no activity for a specified period of time may be referred to as dormant or inactive. After a certain period of dormancy the account may be closed.

Double-cycle billing

Double-cycle billing is a practice that calculated credit card interest based on the average daily balance for the previous two billing cycles instead of one. This ensured that consumers who paid off their full balance each month would still be charged interest for those purchases. This practice was banned under the Credit CARD Act of 2009.

Due date

The date by which the scheduled payment must be received or postmarked by, after which a late charge will be applied.

Elite qualifying miles

Frequent flyer miles that contribute toward qualifying the customer for a premium level of membership. Generally, only miles earned by purchasing fare tickets count toward higher levels of membership, not ones earned by making purchases, but this varies by the credit card issuer.

Elite status

Elite status is a premium level of customer membership often offered by frequent-flyer issuers and hotel loyalty reward programs. Various levels of membership are offered to provide increased benefits and privileges to customers who provide the most or most frequent business.

EMV

EMV stands for "Europay, Visa, Mastercard" and represents a set of standards adopted for ensuring cross-functionality between integrated circuit cards, ATMs, and Point of Sale terminals.

Equal Credit Opportunity Act

A federal law preventing creditors from discriminating against consumers on the basis of a variety of factors including age, sex, race, national origin, or marital status.

Everyday debit card transactions

Ordinary purchases made with a debit card; this does not include scheduled recurring automatic drafts.

Fair and Accurate Credit Transactions Act

An amendment to the Fair Credit Reporting Act that permits consumers to request a copy of their credit report from each of the three credit reporting agencies once every twelve months. It also contains regulations to protect against identity theft, such as a requirement that personal identification be disposed of securely.

Fair Credit Billing Act

An amendment to the Truth in Lending Act, designed to protect consumers from predatory billing methods and to provide a system for disputing errors that may occur in credit card accounts.

Fair Credit Reporting Act

A federal law regulating the collection and dissemination of consumer data, including the exchange of credit information between the credit reporting agencies, consumers, and credit issuers.

FDIC

FDIC stands for Federal Deposit Insurance Corporation. It is a federal agency created in 1933 to protect against bank failure, and insures each bank deposit for up to $250,000.

Federal Reserve Board

Commonly referred to as "The Fed", the Federal Reserve Board is the central bank of the United States, and sets national monetary policy including the key interest rate, known as the Prime Rate, on which lending and credit card interest rates are based.

Fee per additional cardholder

The fee charged for each additional cardholder. (An "additional cardholder" is a person authorized by the primary cardholder to make charges to the account and to receive information about it. Ultimate responsibility for payment remains with the primary cardholder.)

Fee-harvesting credit cards

Fee-harvesting credit cards are designed to produce income for the issuer in the form of fees rather than interest. Typically these cards are issued with low credit limits and multiple high fees, including processing, annual, and monthly fees. These cards were marketed to individuals with credit challenges, and were seen as a predatory lending practice and subsequently regulated by the Credit CARD Act of 2009 which capped fees at 25% of a card's credit limit in the first year.

FICO

FICO is the most commonly known of several companies that provide credit scores through use of proprietary software. A FICO credit score ranges from a low of 300 to a high of 850; typically someone with a higher score will receive better interest rates on loans and credit cards.

Finance charge

A fee charged on loans and credit card accounts, representing the cost of credit. This charge is typically based on a percentage of the average daily balance of the amount owed, plus any additional fees.

Fixed-rate APR

A credit arrangement under which the periodic interest rate is set at a single rate that will not change during the life of the loan or amount of time specified in the cardholder agreement.

Fleet cards

Fleet cards are connected to business credit accounts used to pay for fleet-related expenses such as gas and vehicle maintenance.

Float

Float refers to the time period between the transaction and the time it posts to the credit card account.

Floor

In credit card terms, the floor is the lowest level a variable interest rate will fall to, regardless of adjustments to the Prime Rate on which rate changes are based. This practice was forbidden under the Credit CARD Act of 2009.

Foreign Transaction Fee

This is the fee (expressed as a percentage of the transaction amount) that you would be charged on credit card transactions made in countries that use a currency other than the American dollar or involving a non-US bank.

FTC

FTC stands for Federal Trade Commission, which is responsible for enforcing a variety of consumer protection measures.

Garnishment

A debt-collection method under which overdue payments are debited directly from an individual's paycheck or other source of income until the debt is paid in full.

Go-to rate

The standard interest rate charged after the expiration of any introductory rate applied.

Grace period

The grace period is the time between a purchase and when interest charges will be applied. If full payment is made before the end of the grace period, which is typically one billing cycle but is required by the Credit CARD Act of 2009 to be at least 21 days, no interest fees will be charged.

Guarantor

Guarantor is another term for co-signer, a person who agrees to be legally liable for the payments on a debt if the primary borrower defaults. Typically a guarantor is required on an account when the primary borrower would not be eligible to be approved otherwise.

Hard inquiry

When a consumer applies for a new credit account and a copy of their credit report is requested, a "hard inquiry" is recorded. A high number of hard inquiries will have a small negative effect on a credit score.

Hard pull

A hard pull is the request for a copy of a consumer's credit report, indicating that they have applied for a new credit account, that creates a hard inquiry, and the terms can be used interchangeably. A number of hard pulls in a short period of time will not negatively impact a consumer's credit score, as it will be identified as comparing rates for a loan or mortgage. An excessive number of hard pulls on a routine basis over the long term will have a negative effect.

Hold

See "block."

Inactive account

See "dormant account."

Index

The index is a rate on which finance charges are based.

Installment loan

A loan which is repaid in equal periodic installments over a specified period of time. The amount of the payment does not change during the life of the loan, nor does the interest rate.

Interchange fee

A fee associated with credit card processing, paid by the merchant to the credit card processing company. This fee is typically around 2% of the amount charged. The fee may be higher on online purchases for reasons of security.

Interest rate

The interest rate (a.k.a. “Annual Percentage Rate” or “APR”) is the percentage rate you would be charged on unpaid balances. It is an “annualized” value, which means you should divide it by 12 to see the approximate amount of interest you would be charged per month.

Interest rate cap

The highest rate permitted under the terms of a credit card agreement or the law.

Interest-free period

See "grace period."

Introductory APR (a.k.a. "Introductory rate")

A promotional interest rate charged on new accounts for a specified term; after the introductory term expires other, usually higher, rates will apply.

Introductory period

The number of months during which an introductory APR will apply.

Issuer

The bank, credit union, or other company that issues credit cards and provides a credit line.

Jamming

Jamming is a term for a scam by illegitimate "credit repair agencies" in which they inundate the credit bureaus with dispute letters. This overloads the system and creates excessive delays in which items must be removed from credit reports due to lac of verification, although this is temporary.

Jitter

A fraud deterrent technology that distorts information that card skimmers read from the magnetic stripe.

Judgment

A court order to pay a debt, which is recorded on your credit report for seven years. This can occur when a consumer defaults on their payments and the lender pursues this matter through the court system. The result may be garnishment of wages or payment via seizure of assets.

Knuckle-buster

A machine that takes an impression of a credit card, onto a receipt with attached carbon copies. The card is placed on the machine and the receipt on top of it, then the sliding top of the "knuckle buster" slides across the surface, making an impression of the card name and numbers on the receipt. This is considered more secure than handwriting the information.

Late-payment fee

A fee that is charged if a scheduled payment is not received by the payment due date.

Levy

A levy is the seizure of certain types and amounts of property as payment for an unpaid debt. When a judgment has been granted by a court against a debtor who is in default, a levy is granted to permit the debt to be collected.

Lien

A lien is the legal right to take control of certain property in the case of consumer default. A lien attached to property prevents it from being sold; ownership can not transfer until the lien is released by full payment being received by the lien holder.

Line of credit

A revolving loan with a set maximum amount. Payments are based on the amount of loan outstanding during a given billing cycle, and payments return funds to the available amount that can then be spent or withdrawn again. Withdrawal may be through a variety of methods including check, overdraft, or card, and interest rate varies based on a number of factors.

Loyalty program

A program that rewards consumers who make frequent purchases from a company of a family of brands. Rewards may be discounts, upgrades, special sales, or other privileges.

Magnetic stripe card

A type of plastic card with a strip of magnetic material attached to it. Information identifying the card and the account it is linked to is embedded into the magnetic material, which can be read by ATMs, point of sale terminals, and other swipe readers.

Margin

The margin is the amount added to added to the prime or other index rate to arrive at the rate charged on a variable rate loan. The loan may, for example, charge "Prime plus 3%" and will rise or fall with the Prime rate.

Membership fee

See "Annual Fee."

Merchant bank

A merchant bank is the bank that issues a business vendor their "merchant account," through which credit card payments are received for transactions processed. The merchant bank charges a small percentage of each transaction as a fee for this service, and deposits the remainder in the vendor's bank account of choice.

Minimum finance charge

Credit cards usually include a minimum finance charge in the card agreement. This is the smallest amount of interest that may be incurred each month, which may be higher than the amount due on the balance based on the stated interest rate.

Minimum interest charge

See "Minimum Finance Charge."

Minimum payment

The lowest amount that the customer must pay by the due date each billing cycle. Each issuer has their own formula for determining this amount, but it is defined in the membership Terms and Conditions document.

Monthly statement

A document provided either in electronic or paper form to each customer for each account, at the end of every billing cycle. This document details all charges, payments, and adjustments made during the defined period.

Network

The network (e.g., Visa or Mastercard) is like a middle-man between a bank/issuer (e.g., Capital One) and a merchant (e.g., Starbucks). The network is responsible for actually processing the transaction. It is also sometimes referred to as the “processor” or the “association”.

New balance

New Balance is the balance on the last day of the billing cycle, when all debits, credits, and adjustments have been applied.

NFC

The acronym NFC stands for Near Field Communication, which is a technical protocol enabling smartphones and other devices to exchange or share small amounts of information by touching the devices to each other or moving them within a few inches of each other.

OCC

A federal agency responsible for the regulation and supervision of the national banks and US branches of foreign banks.

One-time processing fee

A fee charged by some credit card issuers to process the credit card application.

Open loop

An "open loop" credit card is part of one of the large credit processing groups and bears its logo, either Visa, MasterCard, American Express, or Discover. These cards can be used anywhere those cards are accepted, for any purpose, but in exchange for this convenience there are usually fees attached to membership.

Opt-in

Providing permission to a company to include you on a list or to receive an optional service.

Opt-out

Denying permission to a company to include you on a list or to receive an optional service.

Overdraft

Overdraft is a term for exceeding the limit of one's checking account. This might be done by writing a check for an amount larger than the account balance, by ATM or check card transactions, or via electronic bill payments. Significant fees are charged in the case of an overdraft, unless there is overdraft protection in place.

Overdraft advance APR

The interest rate you'll be charged (expressed as an annualized percentage -- in other words, you'd be charged a smaller rate than this each billing cycle) on the remaining balance that was overdrafted.

Overdraft: Overdraft is a term for exceeding the limit of one's checking account. This might be done by writing a check for an amount larger than the account balance, by ATM or check card transactions, or via electronic bill payments. Significant fees are charged in the case of an overdraft, unless there is overdraft protection in place.

Overdraft fee

The fee charged per overdraft.

Overdraft: Overdraft is a term for exceeding the limit of one's checking account. This might be done by writing a check for an amount larger than the account balance, by ATM or check card transactions, or via electronic bill payments. Significant fees are charged in the case of an overdraft, unless there is overdraft protection in place.

Overdraft protection

Overdraft protection is offered by banks as a method of avoiding the high fees charged when an overdraft occurs. Protection can be in the form of an automatic transfer from another account in the same bank, or from a line of credit. Some fees may apply and this is an opt-in service.

Over-the-limit fee

Similar to an overdraft fee, an over-the-limit fee is applied when a credit card customer exceeds the credit limit on their account.

Participation fee

See "Annual Fee."

Payment history

A consumer's record of credit payments is referred to as their payment history. It includes both the timeliness and the amount of payments, and has a high level of significance in determining one's credit rating.

Penalty APR

This is the higher interest rate that is charged to a customer when certain conditions have occurred, such as late payments, non-payment, or exceeding their credit limit. (This is also sometimes known as the "default APR".)

Penalty fees

Penalty fees are additional fees charged for certain infractions of the legal agreement associated with your account, such as late payment fees, over-limit fees, etc.

Periodic rate

The periodic rate is calculated by dividing the APR by the number of billing periods in the year, thus arriving at the rate that is charged each period. Thus, if a card has an APR of 18% and is billed twelve times per year, the periodic rate will be 1.5%

Piggybacking

Piggybacking is a term for someone with a poor credit score becoming an authorized user on a credit card account that has a good payment history, which positively influences their score if it is reported to the credit bureaus. This practice has come under scrutiny in recent years, and some credit card issuers do not report authorized users to the credit bureaus in part for this reason.

Plastic (card)

A nonspecific term that refers to any credit, debit, or ATM card, typically with a magnetic stripe or computer chip to contain identifying information.

Post date

The date that a credit card charge reaches the credit card issuer and goes on the customer's purchase record.

Posting

Posting is a process applied to a credit card or other financial account, in which transactions such as purchases, credits, and payments are documented on their account and the change in their balance calculated.

Pre-approved

Pre-approved usually refers to credit card offers received unsolicited in the mail. The pre-approval was reached by screening for credit scores over a selected number and providing the offer to those individuals. The advertised APR may not apply after the the offer is accepted, depending on other factors, and the offer contains language specifying this fact.

Premium credit card

A card marketed to consumers with higher-than-average income, these cards have high credit limits, and often offer extra perks and features such as rewards, travel insurance, or purchase protection.

Prepaid card

A prepaid card is not a credit card, nor is it linked to a bank account. It is a stored-value card, and can be used to spend only the amount of money that has been transferred onto the card. This is effective to limit risk when traveling or budgeting. Some prepaid cards are reloadable and some are not.

Prescreening

The process of Prescreening is one in which credit card issuers determine specific criteria and purchase from the credit bureaus a number of records that fit that criteria. These individuals will receive "Prescreened" offers; under provisions of the Fair Credit Reporting Act, these individuals must receive definite offers of credit, however the specific terms may vary from the ones advertised on the mailer.

Prime borrower

A consumer whose credit score is well above average and an excellent payment history. These individuals are likely to receive more favorable interest rates than those with average payment histories.

Prime rate

See "Index." The Prime Rate is the interest rate set by banks and is the lowest rate that may be charged for credit.

Private label credit card

A Private Label credit card is a card that can only be used in a specific retail store or group of stores. They are branded with the retailer, dealer, or corporation name and frequently have higher interest rates than general-purpose open loop cards.

Processing date

The date on which the transaction begins to be processed en route to its final cost allocation.

Processor

The processor is the company that collects transaction information and expedites the exchange of funds between financial institutions.

Purchase APR

The interest rate paid for ordinary purchases, separate from promotional and cash-advance rates.

Re-aging, or re-age

Re-aging is a term for "re-setting the clock" on an account that is in default. The statute of limitations permits credit bureau reporting and collection attempts through the courts for specified lengths of time; if an account is reaching the end of that time and the customer makes a payment on the account, or even makes an acknowledgement of it, the debt can be re-aged and the statute of limitations begins from that new date.

Redlining

Redlining is a term for the unethical practice of making it difficult or impossible for residents who live in certain areas to obtain services such as a mortgage, a loan, or insurance. They are deemed a "poor credit risk," however this is based entirely on their race and place of residence rather than legitimate creditworthiness data.

Regulation DD

Also known as the Truth in Savings Act, this regulation requires that when opening a new account, a customer must be provided with complete and accurate information describing all charges, fees, and interest rates that may be associated with the account.

Regulation E

Regulation E delineates the rules, procedures, and guidelines related to electronic funds transfers (EFTs.) It also provides specific rights to consumers when using EFT, and establishes protections and procedures for the resolution of EFT-related errors.

Regulation X

This regulation is part of the Securities Exchange Act, and concerns limits places on the amount of credit foreign persons or organizations are eligible for when purchasing US Securities.

Regulation Z

Regulation Z is a Federal Reserve Board regulation requiring credit card customers to be provided with all interest rates, fees, and other charges that may be assessed at any time during the life of the account. Lenders soliciting new accounts must clearly disclose specific information such as the interest rate. Full terms and conditions must be supplied to all current and potential cardholders periodically and upon the adoption of any changes.

Reloadable card

Reloadable cards are a type of prepaid card. They can be used anywhere a general-purpose credit card or debit card can be used, but are not connected to a line of credit or a bank account. If an attempted purchase is for a higher amount than is available on the card, the payment will be declined. These cards can be repeatedly "reloaded" for convenience but carry multiple fees.

Retail credit card

One example of a closed loop card, retail cards may be affiliated with a single retail store or with a chain of stores.

Retail merchant

A dealer of retail goods, specifically in a "brick and mortar" store location.

Retroactive interest rate hikes

Retroactive interest-rates hikes were common before the Credit CARD Act of 2009 strictly limited the circumstances under which they may be permitted. This is the practice by credit card issuers of increasing the interest rate on existing balances, which they previously were able to do at will.

Returned payment fee

A fee that is charged if a check that was submitted for payment is returned due to insufficient funds.

Revolver

A cardholder who runs up a balance, pays it down over time, and builds it up again is referred to as a "revolver" because their credit "revolves" - they do not maintain a high balance indefinitely, paying only the minimum, nor do they pay their balance off every month.

Revolving balance

The balance remaining on a credit card at the end of the billing period is called the revolving balance, because it stays on the account through one or more cycles and is thus said to "revolve."

Revolving line of credit

A revolving line of credit is one in which a certain amount of credit is available, and funds paid toward the balance owed become available to be spent or withdrawn again. One example of this type of credit is a credit card: funds repaid are returned to the balance of available credit.

Rewards card

A card that provides a bonus incentive for card spending, usually in the form of points that can be exchanged for rewards such as gift certificates, airline miles, or cash.

Risk-based pricing

Lenders using risk-based pricing will assign interest rates based on the individual's payment record and credit history.

Roll rate

The ratio or percentage of customers whose accounts fall 30 days delinquent who will remain delinquent to the 60-day mark, and the 60 day delinquencies that will then reach or exceed 90 days. If one-fifth of the accounts that reach one level continue to the next, the "roll rate" would be 20%.

Schumer Box

The Schumer box is a section on credit card applications and disclosure documents that provides information on rates, fees, and terms and conditions of the credit card agreement in a clear and readable format. Named after Charles Schumer, who was the chairman of the Senate Banking Committee when the Truth in Lending Act was enacted,

Secured credit card

Secured credit cards use a savings deposit as collateral, making them "secure" as the lender is not at risk of loss. They are an option for individuals who do not qualify for a standard card and need to document a positive payment history to improve their credit score.

Secured debt

Secured debt uses collateral to protect the lender against loss, rather than only creditworthiness as based on a credit report or score. Auto loans and mortgages are common examples of a secured loan; if the borrower defaults, the lender may seize possession of the collateral and sell it to fund repayment of the debt.

Security code

Also referred to as a CVV (Card Verification Value) or CVC (Card Verification Code), the security code is a three or four digit number printed on the credit card, usually on the back. This is a fraud prevention measure verifying that the physical card is present at the point of transaction.

Semi-secured credit card

A "semi-secured" credit card is an intermediate stage between a secured credit card and a standard card. Not all credit card issuers offer semi-secured cards; in the case of those that do, a secured-card customer who has begin to develop a good payment record may be extended credit beyond the amount of their savings deposit, so that some of their credit line is secured by collateral and some is not.

Service charge

A fee charged in exchange for any of the various services provided by the lender or processing company.

Settlement

Settlement is the process of purchases or transactions being documented and approved by the credit card processor; they are then cleared for payment and posted to the cardholder's account.

Set-up fee

A service fee charged by a card issuer when a new account is created.

Soft inquiry

A soft inquiry occurs when a consumer checks their own credit, or a check is run by a potential employer, or some other reason that does not involve applying for new credit. These inquiries do not affect the person's credit score. Also called a "soft pull."

Soft pull

See "Soft inquiry."

Standard APR

The standard APR is the interest rate charged in the absence of introductory or promotional rates. Multiple standard APRs may apply; for example one for purchases and one for cash advances.

Statement

See "Billing statement."

Stored-value card

Cards which have a prefunded monetary value programmed into a computer chip. They look like and function like a credit card. Unlike a stored-value card, the

Super-prime credit

Super prime is a designation for credit records that are absolutely ideal and unblemished. This term was created as a way for lenders to narrow the pool of eligible borrowers to as small a group as possible, cutting out a portion of those previously considered to be the highest level of "prime" candidates. There are no rules regarding where the division between the groups lies, as each lender makes that determination based on their own ranking of relevant factors.

Teaser rate

A low introductory rate marketed to new credit card customers to entice them to open an account. These rates usually last six to twelve months, after which the standard or "go to" rate will be applied to the account balance.

Terms and conditions

The contents of the cardmember agreement, which spells out the rules, rates, fees, the dispute process, and any other terms of the contract the cardholder is bound to by using the card.

Thin file

A thin file is a credit report without a significant number of credit accounts. These consumers typically have difficulty obtaining credit; lenders may be willing to consider other types of payment history, however the interest rates are likely to be higher than if their credit record were robust.

Tiered rewards

A cash-back reward program that increases the percentage of reward as the amount spent on the card increases. The first $1000 of spending might receive a cash-back reward of 1%, purchases above $1000 and less than $5000 may be rewarded at 2%, and so on through the defined levels.

Transaction

In commercial terms, a transaction is an exchange - usually of goods or services for some form of legal payment. For accounting purposes, a transaction is any event that changes the balance of assets and/or liabilities on an account.

Transactor

A person who performs a transaction. In credit card business terminology the word refers to a person who doesn't carry a revolving balance, but uses the credit card and pays their bill in full every month. This type of consumer avoids paying interest charges while enjoying the benefits available to cardholders.

Treasury bill rate

The interest rate paid on a Treasury Bill. T-bills do not earn a standard rate of interest, but are sold at a discount, so the difference between their purchase price and value at maturity is considered to be implied interest.

Truth in Lending Act

This law was enacted in 1968 to protect consumers from predatory practices and facilitate the informed use of credit. TILA required that borrowers be provided with standardized disclosures regarding credit terms and fees, and gave consumers certain rights to prompt and impartial resolution of billing disputes.

Truth in Savings Act

This law was enacted in 1991 to enable consumers to more easily compare terms, interest rates, and fees between competing banks' savings accounts. It standardized the disclosure information that must be provided to potential account holders.

Unsecured credit cards

Most credit cards are unsecured, meaning not backed up by collateral. They are established based on the applicant's creditworthiness as determined by the lender's evaluation of the credit report and credit score.

Unsecured debt

Any debt that is not backed up by collateral. If a borrower defaults on unsecured debt, the lender has no recourse other than through the courts, whereas for a secured loan such as a mortgage, the lender has the right to seize assets if payment is not made.

Usury

The practice of lending money at excessively high interest rates, particularly for the purpose of making profit for the lender. Credit card companies will often base their corporate offices in states without usury laws, as those laws will apply to the cardholder terms and conditions regardless of the state of residence of the cardholder.

Utilization ratio

The debt utilization ratio measures the proportion of their total available amount of credit a consumer has currently used. Utilization ratio is an important factor in calculating credit scores; a lower score is preferred because it indicates that the borrower is carrying less debt than is available and can more easily make their payments.

VantageScore

An alternative to the FICO score, VantageScore is a collaboration between the three major credit agencies - Experian, Equifax, and TransUnion. A VantageScore falls between 501 and 990, unlike FICO's 300 to 800 range.

Variable-rate APR (a.k.a. "variable interest rate")

An interest rate that may be adjusted during the life of the debt, typically due to changes in an index such as the prime rate.

Void

Void is a term for reversing a transaction. It will not be processed and the records will not indicate that it ever occurred.

Workout agreement

A mutually beneficial agreement between a lender and a borrower who is in default.

X (Regulation X)

See "Regulation X."