Curious about credit card lingo? The BestCards glossary provides helpful definitions to hundreds of terms – both common and uncommon – that you may see as you navigate the world of credit cards and personal finance. We constantly add entries to our directory, so check back often to refresh your knowledge of the credit card industry’s vocabulary.

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  • 5/24 Rule
    The 5/24 rule applies specifically to applicants who wish to open a new personal credit card with Chase. The 5/24 rule stipulates that, if your account shows five or more hard inquiries within the last 24 months, your credit card application will be rejected by Chase. The 5/24 rule applies to(...) - Read More
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  • 1099-C
    Form 1099-C, Cancellation of Debt, is an Internal Revenue Service form filed by creditors who forgive debts of $600 or more. When creditors file this form, they are required to provide a copy to the debtor whose debt was forgiven. - Read More
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  • Account Hold
    Also known as a “hold” or "freeze". A restriction placed by a financial institution on a borrower’s account, be it an individual consumer or business, that limits them from obtaining funds or making purchases. - Read More
  • Account Holder
    Either the primary or secondary borrower listed on an account that is responsible and legally liable for paying down debts owed to lenders, as well as any associated charges. - Read More
  • Account Number
    Also known as a "primary account number". The unique number assigned by a financial institution to a borrower, be it a person or business, in order to identify their account. For credit cards, the account number can commonly be found embossed on the front of the physical card or printed on the back. - Read More
  • Account Statement Closing Date
    Also known as your “cycle date”. The last date of your billing cycle, on which finance charges are assessed and your credit card statement is generated. This is different than your “due date”. - Read More
  • Account Takeover Fraud
    A form of identity theft in which the criminal obtains access to a victim’s bank or credit card account (often via a data breach, malware, or phishing) to make fraudulent transactions. - Read More
  • Accrual Rate
    The rate at which a member can earn points in a rewards program – for instance 2 points for every dollar spent - Read More
  • Acquirer
    An entity that processes a merchant’s daily credit card transactions and settles them with the customer’s card issuer. This entity or financial institution “acquires” transaction details for the merchant and acts as an intermediary to facilitate the credit card transaction process between the(...) - Read More
  • Acquisition
    In relation to the credit card industry, an acquisition is the attaining of an individual consumer or a business as a credit card customer. - Read More
  • Add-On Rate
    Also known as “add-on interest”, this is an alternate method of calculating interest on a loan. It is determined by taking the loan’s annual interest amount, multiplying it by the number of years in repayment, and adding the figure to the loan’s principal amount for each monthly payment. As(...) - Read More
  • Additional Cardholder
    Also known as “authorized user”. This is an individual who is added to the main cardholder’s account and is issued an additional credit card. While the additional cardholder can make separate purchases, the main cardholder remains responsible for paying off all charges incurred to his/her(...) - Read More
  • Adjusted Balance
    Also known as the "adjusted balance method". An accounting method employed by credit card companies in order to determine the finance charge posted to a cardholder’s account at the end of the billing cycle. in which payments (or credits) made to the account are applied. - Read More
  • Adverse Action
    A negative decision reported to a business or individual, usually in the form of denial of credit or the best possible terms. Federal law requires the subject of an adverse action to be given an explanation as to why they received it. - Read More
  • Adverse Action Codes
    Also known as a “reason code” or “score factor”. These are the codes used on a credit report or adverse action report to describe why a person’s credit score isn’t at a higher level. Codes can either use words or numbers and vary between credit score reports. - Read More
  • Adverse Credit History
    A consumer’s credit history is considered adverse if it includes severely late payments, repossessions, bankruptcy, tax liens, or debt write-offs. Those with adverse credit histories are unlikely to be considered for favorable loans or lines of credit. - Read More
  • Affinity Card
    A credit card offered in partnership between a card issuer and a non-financial organization, such as a university, sports franchise, or nonprofit company that they are fans of (or have an affinity for). These “affinity” groups often offer consumers discounts or exclusive promotions in(...) - Read More
  • Air Miles
    A rewards point variation that can be earned by making qualified purchases, often with an airline credit card, and redeemed for airfare discounts. - Read More
  • Airline Alliance
    In air travel, an alliance is a group of carriers who allow frequent flyers to earn miles when traveling with any member carrier. These miles may then be used to book travel on any alliance member flights. - Read More
  • Airline Credit Card
    A co-branded credit card offered in partnership between a card issuer and an airline. Cardholders of such cards usually enjoy perks such as rewards programs, statement credits, and other promotions exclusive to that airline. - Read More
  • Alternative Methods of Payment
    Also known as "AMOP". These are methods of payment other than cash, which can include credit/debit cards, cryptocurrencies, virtual wallets, or loyalty program points. - Read More
  • American Express
    One of the major credit card issuing corporations and also one of the last major issuers of charge cards. In addition to being a credit card network, American Express also issues its own cards – unlike Visa and Mastercard. - Read More
  • Amortization
    The process in which payments are regularly made to reduce debt for an intangible asset, such as a mortgage, according to a fixed schedule. - Read More
  • Annual Fee
    A fee charged every calendar year to cardholders by credit card issuers for owning and using a credit card. Annual fees are most common on secured cards and credit cards that offer multiple incentives, such as rewards programs. - Read More
  • Annual Percentage Rate
    Also known as "APR". A rate in which interest charges for a credit card or a loan are calculated annually and applied to a consumer’s account each month he/she carries an outstanding balance. This rate is calculated as a percentage and combines payable interest as well as other fees and charges. - Read More
  • Application
    A document signed and submitted by a consumer requesting a credit card. Applicants must submit basic personal information in addition to a Social Security number and income. Applications help card issuers identify applicants and decide whether they should be issued lines of credit. - Read More
  • Application Fee
    A fee that is charged to consumers in conjunction with submitting a credit card application. These fees are most common for credit cards directed at individuals with poor credit. - Read More
  • Application Fraud
    A type of identity theft crime in which an individual applies for a credit card by using another victim’s personal information. - Read More
  • Approval Response
    Also known as a "purchase approval" and "transaction authorization". An authorization code received by a merchant to verify a credit card or debit card used by a consumer during a transaction at a point of sale. - Read More
  • Arbitrage
    Also known as "stoozing." The practice of exploiting a price difference of an asset or security across different markets in order to gain a profit. It is a low-risk way of profiting off of market discrepancies, but also short-term due to said discrepancies tending to stabilize quickly. - Read More
  • Arbitration
    A method of resolving disputes without the involvement of courts. When a consumer wants to obtain a credit card, he/she must usually accept mandatory arbitration, which revokes the right to sue the credit card issuer and instead forces the parties to settle disputes before an arbitrator. - Read More
  • Association
    A group of banks or organizations that issue cards. Associations set transaction terms that apply to merchants, issuers, and acquirers. Examples of credit card associations are Visa, MasterCard, American Express, and Discover. - Read More
  • Authentication
    The process of verifying that a credit card transaction is being requested by the rightful owner of the card being used for payment. Authentication involves the merchant, acquirer, credit card network, and issuing bank. - Read More
  • Authorization
    A necessary step during the transaction process at a merchant point of sale that determines whether or not a customer can complete the intended purchase of goods or services. A card issuer has the power to authorize or decline any given transaction after it has verified the transaction’s(...) - Read More
  • Authorization Code
    A code sent by a card issuer or processor that indicates whether authorization for a transaction at a point of sale is approved or denied. - Read More
  • Authorization Date
    The day, month, and year when a credit card transaction at a merchant point of sale was approved by the card issuer, which is not necessarily the same as the transaction date. - Read More
  • Authorization Only
    A type of transaction in which an amount of funds is reserved for the merchant’s protection while the payment method used is verified to complete the transaction. - Read More
  • Authorized Amount
    The final approved amount of money that a merchant transmits to a credit card processor to be charged to a cardholder’s account during a transaction at a point of sale, which verifies if they have the funds to make their desired purchase. - Read More
  • Authorized Transaction
    A credit card or debit card transaction at a merchant point of sale that has been approved by the card issuer. - Read More
  • Authorized User
    An individual who is authorized to use a credit card account and who may be issued a separate credit card linked to said account. Authorized users differ from account holders in that they are not responsible for paying any outstanding balance on the account. - Read More
  • Automated Clearing House
    Also known as "ACH". A network of financial institutions that processes consumer payments. ACHs are typically involved in debit and credit card transactions, as well as direct deposit of funds into accounts. - Read More
  • Automatic Payment
    Also known as "automatic bill payment". A process that automatically withdraws funds from an account to make ongoing payments, usually in monthly intervals. - Read More
  • Automatic Teller Machine
    Also known as an "ATM". A terminal that allows consumers with credit or debit cards to perform actions relating to their card account, such as withdrawing and depositing funds or checking their account balance. - Read More
  • Available Credit
    The remaining amount of credit that is available to be charged. Subtracting outstanding charges from an account’s credit limit results in the available credit. - Read More
  • Average Daily Balance Method
    A formula used by card issuers to determine the amount of interest to be charged on a credit card based on its daily balance. It is calculated by adding each day’s balance and dividing the total by the number of days in the billing cycle. That average is then multiplied by the monthly interest rate. - Read More
  • Award
    A product or service purchases through points in a rewards program. - Read More
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  • Bad Credit
    Also known as “poor credit”. An individual with a low credit rating or credit score due to irresponsible practices is considered to have bad credit. Actions such as missing or making late payments, maxing out credit card limits, and declaring bankruptcy can result in lowering one’s credit(...) - Read More
  • Balance
    A balance is any unpaid amount on a credit card account or credit line that the borrower has yet to pay back the lender by the end of the billing cycle. If the amount owed is paid in full, the balance will be reduced to 0. Otherwise, charges are likely to be incurred by the borrower, as seen(...) - Read More
  • Balance Chasing
    A bank may reduce a customer’s line of credit as he/she pays down a credit card balance. This is known as balance chasing, and banks may employ this tactic as a way of guarding against borrowers who prove to be high-risk. - Read More
  • Balance-to-Limit Ratio
    Also known as “credit utilization ratio” and “debt-to-limit ratio”. The comparison of a borrower's available credit as compared to any outstanding balances they may have, be it as an individual or business. Having a lower balance-to-limit ratio often leads to a borrower being seen as less of a(...) - Read More
  • Balance Transfer
    The process of a borrower moving the outstanding balance on one of their credit cards to another credit card, often as a means of seeking a lower interest rate in order to help pay down their debt at a faster rate. - Read More
  • Balance Transfer Credit Cards
    Balance transfer credit cards are ideal for transferring an existing credit card account balance and thereby (ideally) paying a lower interest rate on the transferred balance. Balance transfer credit cards tends to offer incentives such as introductory periods with 0% APR or no balance(...) - Read More
  • Balance Transfer Fee
    A fee charged when transferring a balance from one credit card to another. Issuers generally charge a percentage of the transferred amount when said transfer is made. - Read More
  • Bank
    A financial institution licensed to offer services such as accepting deposits, providing loans, exchanging currency, and more. - Read More
  • Bank Account
    Also known as an “account”. A representation of the funds that are maintained by a bank where consumers can make deposits or withdrawals. Thanks to prepaid cards, bank accounts are no longer mandatory for cardholders to obtain select credit cards.      - Read More
  • Bank Card
    Also known as a “bankcard”. Issued by a bank, these are the payment cards tied to a customers’ account that they use to make transactions, such as a credit card or debit card. - Read More
  • Bank Holding Company
    Regulated by the Federal Reserve Board, these are companies that have majority control of one or more banking institutions. Credit card issuers’ operations are overseen by their parent bank holding company. - Read More
  • Bank Identification Number (BIN)
    Also known as an “issuer identification number”. The first four to six digits of an account number as seen on a debit card or credit card, used to identify the card issuer. - Read More
  • Bankruptcy
    Also known as “insolvency”. The legal status of being unable to make payments on outstanding debts that are owed to creditors. Individuals or businesses can declare bankruptcy, after which their assets may be evaluated and liquidated in order to repay creditors and start fresh. - Read More
  • Basis Point
    Also known as “BPS”. This is a unit of measurement that is used to measure interest rate percentages, equal to one-hundredth of one percentage point. For example, an interest rate increase of 5.0% equals 500 BPS. - Read More
  • Billing Cycle
    The specific recurring period of time between two billing statement dates for an account, commonly on a monthly interval. - Read More
  • Billing Statement
    Also known as a “periodic statement” or “monthly statement”. The official record prepared by a financial institution listing all transactions for an account within a billing cycle usually sent once a month via mail or email. - Read More
  • Blackout Dates
    Some rewards programs have dates which are unavailable for bookings due to holidays or falling in a high-traffic season. These dates are known as blackout dates. - Read More
  • Borrower
    An individual person, business, or other legal entity that is loaned monetary funds from a lender, usually with the agreement that the funds will be paid back at a later date, often with interest. - Read More
  • Bottom Line
    The total of one's monthly income minus monthly expenses, usually used to refer to a company's total earnings. The term originates from the fact that the last line at the bottom of a financial statement typically denotes the total earnings for that month. - Read More
  • Business Card
    Also known as a “business credit card”. These are credit cards issued to business owners in order to help them separate their company’s expenses from their own personal ones. - Read More
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  • Card Churning
    The practice of repeatedly opening and closing credit cards to rack up initial signup bonuses. Churning lets a person earn far more bonuses and rewards than if they kept one credit card. - Read More
  • Card Issuer
    Also known as an "issuer". A financial institution, such as a bank or credit union, that issues credit cards to individual cardholders as well as businesses. - Read More
  • Card Member
    Also known as a “cardholder” or “account holder”. This is the entity authorized to use a credit card, be it a personal or business credit card. - Read More
  • Card Member Agreement
    The contract (agreement) listing the terms and conditions of a card member’s account. Per federal law, this binding agreement is required to disclose the financial formulas for using a credit card (such as the monthly minimum payment formula), the card’s annual percentage rate, annual fees,(...) - Read More
  • Card Reader
    A device that uses an electronic sensor to read the magnetic strip on a credit card or debit card at a merchant point of sale. - Read More
  • Cash Advance
    A direct loan from a credit card, which often has far higher interest rates and fees as compared to purchases or balance transfers. - Read More
  • Cash Advance Check
    Also known as a “convenience check”. This is a check drawn against the available credit line on a credit card which can be used to make purchases. Cash advance checks also tend to have higher interest rates than standard credit card rates. - Read More
  • Cash Advance Fee
    The charge received by a customer when they request access to the cash line on their account. These are often a percentage of the amount withdrawn, with smaller amounts usually assessed a minimum dollar amount. - Read More
  • Cash Advance Rate
    This is the higher rate of interest that banks charge credit card holders on the cash they receive from a cash advance due to it being viewed as risky. - Read More
  • Cash Back
    A rewards program that returns to you a percentage of the total amount spent on your credit card, often monthly, quarterly, or annually. - Read More
  • Cash Card
    A card not linked to an individual banking account that has been loaded with funds that can be withdrawn from ATMs or used to make retail purchases. - Read More
  • Cash Flow
    The money that an organization takes in and disburses within a specific time period, used as a factor to determine the entity’s value. - Read More
  • Chapter 7 Bankruptcy
    Also known as “liquidation bankruptcy”. A type of bankruptcy in which a party’s assets are liquidated in order to pay creditor debts, save for any exempt property. - Read More
  • Chapter 9 Bankruptcy
    A type of bankruptcy in which a municipality (such as a city, county, or school district) can pay their debts off using a structured plan, during which time they are protected from creditors. - Read More
  • Chapter 11 Bankruptcy
    A type of bankruptcy that allows corporations to restructure their debts in order to pay creditors back while keeping their business open. - Read More
  • Chapter 12 Bankruptcy
    A type of bankruptcy in which “family farmers” or “family fisherman” that have “regular annual income” can restructure their debts and devise a repayment plan to pay off lenders, usually within 3-5 years. - Read More
  • Chapter 13 Bankruptcy
    Also known as a “reorganization bankruptcy” or “wage earners bankruptcy”. A type of bankruptcy in which debtors make monthly debt repayments to a trustee according to a structured plan, generally lasting 3-5 years. During this time debtors can keep their property and cannot be directly(...) - Read More
  • Charge Back
    The credit returned to a cardholder from a merchant when a transaction charge is reversed. - Read More
  • Charge Back Period
    The amount of time from the date when a transaction was processed during which an issuer may initiate a charge back. - Read More
  • Charge Card
    A card that requires the full balance on it to be paid each billing cycle before the billing statement due date is up rather than over time. - Read More
  • Charge-Off
    Long overdue credit card balances that are charged against a bank’s loss reserves, usually after six months of non-payment. - Read More
  • Charge-Off Rate
    The amount of defaulted (overdue and uncollectable) credit card balances divided by the outstanding amount owed to the issuer. - Read More
  • Chip and Pin Cards
    Also known as “EMV microchip cards” and “EMV cards”. A secured smart card requiring a personal identification number at the point of sale for identity verification purposes that employs computer chips instead of (or in combination with) standard magnetic stripes to collect and process information. - Read More
  • Closed Loop
    A gift card or credit card that can only be used to make transactions at the point of sale for specific merchants, whether in person or online. - Read More
  • Co-Branded Card
    A credit card issued and endorsed by both a bank and retail brand. These cards often provide benefits for the retail brand, such as airline miles or discounts on merchandise. - Read More
  • Co-Signer
    Also known as a “guarantor”. A person who voluntarily agrees to be liable to pay outstanding loans upon signing an agreement should the primary account holder be unable to do so. - Read More
  • Codeshare
    A codeshare agreement, also known as a codeshare, is a business agreement between one or more airlines that market the same flight (or a connecting service) under their own airline name. Typically, the flight is operated by one airline (the administrating carrier) and seats are then marketed(...) - Read More
  • Collateral Savings Account
    A collateral savings account is savings account, opened with a bank, that acts as a form of collateral and is often used in conjunction with a secured credit card. Since a secured card does not function exactly like a real credit card, a form of collateral needs to be used instead of a credit(...) - Read More
  • Collection
    Delinquent debts that are 60 days past due or more and sought after by collection agencies, often having incredibly negative effects on the credit score of an individual or business. - Read More
  • Collection-Proof
    Also known as “judgement-proof”. An individual or business without assets of value that can be seized and then liquidated in order to pay off delinquent debts. - Read More
  • Commercial Bank
    A financial institution that provides financial services to its customers, such as private individuals and small businesses, and profits through the interest collected when providing them loans. - Read More
  • Common Carrier
    A common carrier is a person or a company that transports goods and/or passengers, along regular routes with set rates. Trucking companies, airlines, and railroads are examples of common carriers. - Read More
  • Concierge Service
    A hospitality-focused perk available through some credit cards that assists cardholders with making arrangements, such as dinner reservations, travel bookings, and acquiring tickets to live entertainment events. - Read More
  • Consumer Credit File
    Also known as a “G.19 report”. A comprehensive report containing the records of a person’s payment history which financial institutions check to determine if you are a credit risk when applying for a loan. - Read More
  • Contact Chip Card
    Also known as an “EMV card” or “chip card”. A credit card or debit card that uses an encrypted computer chip to make purchases at a retailer’s point of sale via direct contact, such as a swipe or tap on a card reader. - Read More
  • Contactless Chip Card
    A credit or debit card that uses a radio frequency to communicate with a card reader at a merchant point of sale instead of making any physical contact, such as a swipe or tap. - Read More
  • Credit Bureau
    Also known as a “credit reporting agency”. A company that collects consumer credit information and compiles reports to help lenders assess a borrower’s credit risk. The three major national credit bureaus are Experian, Equifax, and TransUnion. - Read More
  • Credit Bureau Risk Score
    Also known as a “credit score”. The score assessed by a company (often one of the three major national credit bureaus- Experian, Equifax, and TransUnion) based on an individual’s compiled credit information which is used to help lenders assess that person’s credit risk. - Read More
  • Credit Card
    A plastic card, often embedded with an encoded magnetic stripe or EMV chip, that is accepted by merchants and used as a payment method at the point of sale. Credit cards allow customers to make purchases and pay the transactions' amounts at a later time. - Read More
  • Credit Card Act of 2009
    Also knows as the “Credit Card Accountability, Responsibility, and Disclosure Act of 2009” and the “Credit CARD Act of 2009”. This federal law signed in May 2009 protects credit card users by requiring 45 days' advance notice of significant changes in credit card terms and giving them 21 days(...) - Read More
  • Credit Card Number
    The unique series of digits embossed or printed on a credit card. While the first six numbers on a card represent the issuer identification number, the rest are specific to the card they’re on. - Read More
  • Credit Counselor
    An expert that can advise consumers on debt management and other financial matters. It is recommended that individuals work with credit counselors that are part of nationally recognized and accredited agencies. - Read More
  • Credit Freeze
    Also known as a “security freeze”. The ability for consumers to place a security alert on their credit card, which restricts access to their credit report and prevents new charges from being made or accounts opened, essentially “freezing” it. This method is often employed after identity theft(...) - Read More
  • Credit History
    A record of your financial habits over a period of time, including how you’ve managed debt and whether or not you’ve paid your bills on time, among other actions. This information is evaluated by credit card issuers, lenders, landlords, employers, and other parties to determine whether or not(...) - Read More
  • Credit Inquiry
    A request by an institution (often a lender) for a person’s credit history. Whereas a hard inquiry (or hard pull) can negatively affect a consumer’s credit score and stays on their credit report for two years, a soft inquiry (or soft pull), which doesn’t result in the granting of credit, does not. - Read More
  • Credit Life Insurance
    An insurance policy that can be purchased by a primary cardholder to repay their debt in full should they die before their debt is paid. - Read More
  • Credit Limit
    Also known as a “credit line”. The maximum amount of money that can be charged to a credit card. A person’s credit limit is largely affected by their credit score. - Read More
  • Credit Monitoring Service
    A service that tracks borrower activity on a credit card account and alerts them of any irregular behaviors that may be a sign of fraud, such as a spike in charges made or purchases outside of the country.   - Read More
  • Credit Muling
    Also known as “first party fraud”. A scam involving the acquisition of a high-value product or loan using credit, which is then delivered by a person knowingly or unknowingly to a criminal that won’t be repaying them. - Read More
  • Credit Obligation
    The legally binding contract signed by a borrower stating that they will pay back a loan, such as a credit card agreement. - Read More
  • Credit Rating
    The calculations made by credit bureaus to determine a person’s creditworthiness, based on factors such as employment, income, and past examples of payment behavior. This is a measurement of a consumer’s ability to repay debts owed. - Read More
  • Credit Report
    A compilation of information detailing the credit history of a consumer or business including payment history records, borrowing behavior, credit inquiries, and public records. This information is then used to determine the credit score of said consumer or business. - Read More
  • Credit Reporting Agency
    Also known as a “CRA” or “credit bureau”. A company that collects information about a consumer’s credit history including payment history records, borrowing behavior, credit inquiries, and public records. A CRA uses this data to create a consumer’s credit report. The three major national(...) - Read More
  • Credit Score
    Also known as a “FICO score”. The three-digit score determined by credit reporting agencies based on a consumer’s credit history that indicates their behavior in relating to debt. Having a higher credit score usually indicates a history of responsible payment behavior and is more likely to(...) - Read More
  • Credit Union
    A nonprofit financial institution comprised of and ran by individuals with similar interests, such as common employers or physical location. The profits achieved by credit unions are returned to its members by offering them lower interest rates as compared to those from banks. - Read More
  • Credit Utilization Ratio
    Also known as a “credit utilization rate” or “balance-to-limit ratio”. The comparison of a consumer’s or business’s available credit as compared to any outstanding balances they may owe to lenders. Generally, a lower credit utilization ratio denotes a consumer or business to be less of a(...) - Read More
  • Creditworthiness
    The likeliness of you repaying your debt, as determined by lenders, based on your credit history, credit rating, and other factors. - Read More
  • Cross-Collateralization
    The process of using the assets that serve as collateral for one loan as collateral for another, sometimes unrelated loan. - Read More
  • Currency Conversion Fee
    Also known as a “foreign transaction fee” or "international transaction fee". The charge assessed by credit card companies when a purchase is made by customers in a foreign currency or via a foreign bank, whether or not foreign currency is used in the transaction. - Read More
  • Current Balance
    The most recent amount of total credit card transactions as reflected on your statement balance. This can change daily, and may not show recent returns, pending purchase authorizations, or accumulated interest. - Read More
  • CVV
    Also known as a “card verification value” or “card security code”. The acronym for the security code on a credit card used to verify it. The security code can be on the front or back of the card and be three or four digits long. - Read More
  • Cycle Date
    Also known as your “account statement closing date”. The last day at the end of your billing cycle when finance charges are determined and your credit card statement is generated. This is different than your “due date”. - Read More
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  • Data Breach
    Unauthorized access of sensitive credit card information that can be used for fraudulent purposes, such as ID theft or extortion. Info that can be compromised during a data breach includes names, addresses, social security numbers, account numbers, and much, much more. - Read More
  • Debit
    A charge to an account via a transaction, which can include making a purchase from a retailer, withdrawing money from an ATM, or writing a check. - Read More
  • Debit Card
    A plastic card, often embedded with an encoded magnetic stripe or EMV chip, that is accepted by merchants and used as a payment method at the point of sale. Whereas these balances commonly have the option to be paid over time when using a credit card, debit cards withdraw existing funds from(...) - Read More
  • Debt Consolidation
    The process of combining multiple loans into a single larger loan with more manageable terms for the consumer, such as lower interest rates and lower payments, over a longer payment period. - Read More
  • Debt-to-Income Ratio
    A measurement of a person’s gross income as compared to their personal debt. This calculation is often used when attempting to apply for a loan and can lead to higher rates on a mortgage or being denied said loan in the first place. - Read More
  • Debt-to-Limit Ratio
    Also known as “balance-to-limit ratio” and “Credit utilization ratio”. This is the comparison of a person or company’s available credit versus any outstanding balances they may have, with a lower ratio equating to making them less of a credit risk. - Read More
  • Debtor
    Also known as a “borrower”. An entity with the legal obligation to repay the money they owe to another entity, known as the lender, often with interest. - Read More
  • Default APR
    Also known as a “penalty rate” or “default rate”. The interest rate that can be applied to a borrower's credit card balance if they do not make the minimum monthly payment by its due date. - Read More
  • Default Rate
    Also known as a “penalty rate”. A high penalty interest rate that is applied to your credit card balance upon being late when making a monthly payment. - Read More
  • Deferred Interest
    This is a payment plan that delays the payment of interest on a balance until a scheduled period. At that time, the accruing interest is assessed and charged. - Read More
  • Deleveraging
    The process of paying off existing debts in order to reduce the percentage of one's balance sheet funded by liabilities, therefore being less likely to go into default. - Read More
  • Delinquent Account
    An account which a consumer has failed to make the monthly payment on in time, thus qualifying it as past due and often making it subject to a penalty fee. - Read More
  • Depreciation
    The calculation that determines the current value of a tangible asset, such as a vehicle, based on its initial cost and what is determined to be its estimated “useful life”. - Read More
  • Digital Wallet
    A digital device or program that gives customers the ability to make purchases at a merchant point of sale without using physical currency. - Read More
  • Direct Bank
    A direct bank is a bank that does not use a branch network or physical tellers, instead offering its services remotely. Also known as a virtual bank, online bank, branchless bank, or internet-only bank, a direct bank typically serves customers via online and telephone banking systems, and may(...) - Read More
  • Discount Rate
    Also known as an “interchange fee”. The processing charge paid by merchants to credit card companies in order to accept general use credit cards as forms of payment in their establishments. These charges tend to be between 1% and 3% depending on the transaction. - Read More
  • Discretionary Income
    Also known as “disposable income”. After basic expenses are paid (food, clothing, and shelter), this is the income a person can spend or save. - Read More
  • Dispute
    The questioning of a transaction by a cardholder as seen on their account or statement. A credit card issuer may grant a chargeback for a disputed charge due to an incomplete transaction, defective product, poor customer service, and billing errors as a result of identity theft, among other(...) - Read More
  • Dormancy Fee
    Also known as an “inactivity fee”. A penalty fee imposed on credit card accounts that had not been active for a period of time. These penalties were eliminated following the Credit Card Act of 2009. - Read More
  • Dormant Account
    Also known as an “inactive account”. An account that has not been active for some time. Prior to the Credit Card Act of 2009, these accounts were assessed penalties for not being used. - Read More
  • Double-Cycle Billing
    Also known as “two-cycle billing” and “dual-cycle billing”. A process by which issuers calculate the remaining interest on a credit card within a billing period by taking into account the average daily balance of both the current and previous billing cycle. This calculation was banned(...) - Read More
  • Due Date
    The date by which credit card bills must be paid to avoid penalty fees or other assessments. This is different than the “account statement closing date”. - Read More
  • e

  • Effective Date
    Also known as a “processing date” and a “post date”.  The day that a transaction is authorized and posted to a cardholder’s current balance. - Read More
  • Electronic Funds Transfer Act
    Passed in 1978 by the United States Congress, this legislation establishes consumer rights, liabilities, and protections when they take part in the electronic transfer of funds. This encompasses the use of ATMs and debit cards, as well as bank withdrawals, such as when a card reported to be(...) - Read More
  • Embossed
    In the credit card industry, this refers to the raised numbers commonly seen on older credit cards. Embossed numbers on credit cards were physically recorded on carbon paper using a zip-zap machine following a transaction. - Read More
  • EMV
    A payment method standard that uses smart cards embedded with a computer chip to store account information and create a unique transaction code each time the card is used. This standard was first agreed upon in 2002 by Europay, MasterCard, and Visa (hence the initials EMV). - Read More
  • EMV Cards
    Also known as “EMV microchip cards”, “smart cards”, and “chip and pin cards”. These are secured smart cards that utilize EMV computer chip technology and require a personal identification number at the point of sale for identity verification purposes instead of (or in combination with)(...) - Read More
  • Encryption
    The means by which a credit card user's information is encoded and securely transmitted when the card is used to make a transaction at a merchant point of sale. - Read More
  • Equal Credit Opportunity Act
    Also known as the “ECOA”. The federal law enacted in 1974 that prohibits lenders from discriminating on the basis of race, color, religion, national origin, sex, marital status, or age when making a decision about a potential borrower applying for a loan. - Read More
  • Equifax
    Equifax is one of the three major credit reporting agencies in the United States; as a consumer credit reporting agency, Equifax collects and aggregates financial information about more than 800 million individual consumers, as well as more than 88 million businesses worldwide. - Read More
  • Evergreen Clause
    A clause found in contracts that causes an agreement with a vendor to automatically renew until canceled, such as a streaming entertainment service or product subscription box. - Read More
  • Excellent Credit
    An individual with a credit rating above 740 on the FICO scale thanks to responsible financial habits such as regularly making payments on time, not maxing out credit cards, and avoiding bankruptcy. - Read More
  • Exempt Property
    Property that is covered by exemption laws, allowing an individual to keep a portion of their property away from creditors when they are unable to pay a bill. Typically, exempt property will include the things that an individual needs in order to maintain a job and a household. The type,(...) - Read More
  • Experian
    As one of the three major credit bureaus in the United States, Experian collects and aggregates information on more than 1 billion people, 25 million U.S. businesses, and 235 million individual United States consumers. Experian helps you protect your credit with credit freezes and fraud(...) - Read More
  • Expiration
    When points or miles earned in a reward program cease to be valid. - Read More
  • Expired Card
    A credit card that can no longer be used to make transactions following the passing of the expiration date printed, embossed, or encoded on it. - Read More
  • f

  • Fair Credit Billing Act
    Also known as the “FCBA”. A federal law enacted in 1974 that protects consumers from unfair billing practices and provides a process to appeal those errors. This includes disputing incorrect charges on an account, fraudulent charges not made by the account owner, and not receiving purchased(...) - Read More
  • Fair Credit Reporting Act
    Also known as the “FCRA”. A federal law enacted in 1970 to promote the accuracy, fairness, and privacy of consumer information with regards to their credit report. A 2003 amendment to the FCBA grants consumers the right to receive a free copy of their consumer report from each major credit(...) - Read More
  • Fair Isaac
    Also known as “Fair, Isaac, and Company”, the “Fair Isaac Corporation”, and later “FICO” in 2009. The software company that provides consumer credit scores and analytical services to help lenders determine whether or not a prospective borrower is a potential financial risk. - Read More
  • FAKO Score
    A disparaging term used to describe a credit score that was not calculated by (and is not associated with) FICO when assessing the creditworthiness of a loan applicant.   - Read More
  • Federal Deposit Insurance Corporation
    Also known as “FDIC”. This is the independent federal agency that protects consumers by insuring the money they deposit into a United States bank or savings institution. The agency currently insures deposits up to $250,000 per depositor, granting them a measure of protection for their money(...) - Read More
  • Federal Funds Rate
    The interest rate at which banks and credit unions will lend their reserve balances to other institutions, often overnight, which also serves as a factor in determining short-term interest rates. - Read More
  • Federal Trade Commission
    Also known as the “FTC”. An independent federal agency that protects consumers and prevents anti-competitive business practices. The FTC combats unfair or deceptive practices, including false advertising and the formation of monopolies, which would reduce competition. - Read More
  • Fees
    Any number of charges associated with using a credit card, such as an annual fee, application fee, balance transfer fee, cash advance fee, foreign transaction fee, interchange fee, and returned payment fee, among others. Details on fees are noted in a credit card’s terms and conditions. - Read More
  • FICO
    Also known as “Fair Isaac”, “Fair, Isaac, and Company”, and the “Fair Isaac Corporation”. This can reference both software company and the consumer credit scores said company determines to help lenders decide whether or not a prospective borrower is a potential financial risk. - Read More
  • Finance Charge
    Charges associated with borrowing money assessed by a lender, such as interest, late fees, foreign transaction fees, and other costs. - Read More
  • Financial Institution
    A corporation, such as a commercial bank or credit union, that serves as an intermediary between consumers and the market during monetary transactions and financial dealings. - Read More
  • Fixed Payment Schedule
    See amortization. A fixed payment schedule refers to a schedule depicting when regular payments must be made in order to lower an individual's debt to a creditor, also known as an amortization schedule. The payment amount is usually the same for each payment made, and the interest rate is also(...) - Read More
  • Fixed Rate
    Also known as an “APR” or “annual percentage rate”. This is the rate at which interest charges for a credit card or a loan are calculated annually and applied to a consumer’s account each month they carry an outstanding balance. This rate is calculated as a percentage and combines payable(...) - Read More
  • Fleet Cards
    Payment cards used by businesses to manage expenses relating to company vehicles, such as gas, maintenance, and related supplies. - Read More
  • Flight Segment
    Portions of a travel itinerary where the passenger stops along the way. As flights must begin and end somewhere, all travel consists of at least one segment. Segments may be used towards achieving frequent flyer status tiers. - Read More
  • Floor Limit
    Also known as a "standard floor limit". The highest amount of money that merchants can charge for any single credit card or debit card transaction before getting authorization. This amount is determined by the merchant and their credit card processing company. - Read More
  • Foreign Transaction Fee
    Also known as a “currency conversion fee”, "foreign exchange fee", or an "international transaction fee". The charge assessed by credit card companies when customers make a purchase in a foreign currency or involving a foreign bank (using either domestic or foreign currency). - Read More
  • Fraud
    In the credit card industry, this is unauthorized activity on an account as a result of identity theft. Credit card fraud also includes the illegal act of applying for a new credit card using falsified information. - Read More
  • Fraud Alert
    A security alert on a credit card account or bureau listing that is triggered by either the card issuer or consumer when potentially fraudulent activity is detected. This alert restricts access to their credit card and prevents new charges from being made. - Read More
  • Fraudulent Transaction
    An unauthorized transaction made by someone other than a credit card holder or an approved party, often causing a fraud alert and triggering an account freeze. - Read More
  • Fraudulent User
    A person unauthorized to make a transaction with a credit card. Their fraudulent transaction can lead to a fraud alert, and subsequently, an account freeze. - Read More
  • g

  • Go-To Rate
    Also known as a “standard APR”. The oftentimes higher interest rate that takes effect on a credit card after its introductory period. - Read More
  • Goodwill Deletion
    Also known as a “goodwill adjustment”. The act of having a creditor remove a small mistake you’ve made, such as a late payment, from your credit report. While not guaranteed, you have better odds of being granted a goodwill deletion if you have good credit. - Read More
  • Goodwill Letter
    A formal written request sent to a creditor or collection agency asking them for an adjustment to your credit report that removes a minor infraction. - Read More
  • Grace Period
    The time period during which borrowers can pay outstanding debts due without being charged a late fee or going into default. - Read More
  • Gross Pay
    Also known as “gross income”, “pre-tax income”, or “gross profit”. The amount of money remaining on an employee's paycheck before assessing all taxes and deductions, such as contributions towards Social Security, retirement accounts, and health insurance coverage. - Read More
  • Guarantor
    Also known as a “co-signer” and a "surety". A person who voluntarily agrees to be liable for someone else's debt if the original borrower is unable to pay it back and goes into default. - Read More
  • h

  • Hard Inquiry
    Also known as a “hard pull”. A request by an institution or lender for a person’s credit history. This type of credit inquiry can negatively affect a person’s credit score and stays on their credit report for two years. These requests tend to be made when a person is applying for a credit(...) - Read More
  • Hold
    Also known as an “account hold”. The restriction placed on a person’s account limiting them from making purchases and performing other actions with their account, not unlike the effects of a security freeze. - Read More
  • Hotel Credit Card
    A co-branded credit card (similar to an airline card) that provides incentives for a particular hotel brand and/or its subsidiaries. Offered in partnership between a credit card issuer and a particular hotel or resort chain, benefits often include exclusive discounts and the ability to earn(...) - Read More
  • i

  • Identity Theft
    Also known as “ID theft”. The crime of knowingly using another person’s personal information to commit fraudulent acts, including applying for a new credit card or making purchases using their card. - Read More
  • Inactive Account
    Also known as a “dormant account”. A bank account that has not been used for a select period of time. An inactive credit card account may be closed by the issuer, revoking the card holder’s charging privileges. - Read More
  • Inactivity Fee
    Also known as a “dormancy fee”. Prior to the Credit Card Act of 2009 which eliminated them, these were penalty fees that select banks charged to account holders for not using their accounts for a select period of time. - Read More
  • Instant Approval
    In the credit card industry, this refers to credit cards with an approval process that only takes a few minutes and a line of credit that can be used before a physical card arrives. - Read More
  • Interchange Fee
    Also known as a “discount rate” or “swipe fee”. The charge merchants pay credit card companies in order to accept general use credit cards as forms of payment in their establishments. Interchange fees are usually between 1% and 3%, depending on the transaction. - Read More
  • Interest Rate
    The price that lenders charge others for borrowing money. When it comes to credit cards, different interest rates tend to apply during a card’s introductory period as compared to its standard annual percentage rate. - Read More
  • Interest Rate Cap
    The highest interest rate that a customer can be charged on borrowed funds. These limits can be set by credit card agreements or by law. - Read More
  • Introductory Period
    The set time when first signing up for a credit card during which certain benefits are granted to the credit card holder, such as being charged a lower interest rate by the issuer. - Read More
  • Introductory Rate
    Also known as the “teaser rate”, “intro APR”, or a “promotional rate”. The (often lower) annual percentage rate that precedes a credit card’s standard annual percentage rate. Per the Credit Card Act of 2009, a card’s introductory rate must be at least six months long. - Read More
  • Issuer
    Also known as a "card issuer". An issuer is a financial institution, such as a bank or credit union, that offers credit cards to individuals or businesses. - Read More
  • j

  • Joint Account
    A bank account shared between two or more people, often family members or business partners, in which they all have the ability to deposit and withdraw funds. - Read More
  • Joint Credit
    A credit line issued to two or more individuals that takes their combined credit history and total income and assets into account. All parties who share credit in this way are also responsible for repaying debts. - Read More
  • k

  • Keep and Pay
    The strategy by which a person retains control of a select asset after declaring bankruptcy by continuing to pay for it as initially agreed upon. - Read More
  • l

  • Late Payment Fee
    A charge incurred by a borrower for not making a minimum payment to a lender on or before the agreed upon due date. This payment may follow a grace period, as well as negatively affect one’s credit score. - Read More
  • Lender
    An individual or business (often a financial institution) that loans monetary funds to another person, business, or legal entity, usually with the agreement that the funds will be paid back at a later date, often with interest. - Read More
  • LIBOR
    Also known as the “London Interbank Offered Rate”. The benchmark rate referenced by other banks when adjusting variable-rate loans and credit cards. This rate is based on the interest rate at which banking institutions lend money to each other within the London wholesale money market. - Read More
  • Line of Credit
    Also known as a “credit limit” and “credit line”. An open-ended, revolving loan that can be accessed by a borrower on-demand up to a maximum amount as determined by the lender, such as with a credit card. This limit is based on the borrower’s creditworthiness, who only pays interest on the(...) - Read More
  • Linked Transfer Account
    Two or more accounts that are owned by the same person in the same bank or financial institution that are connected to make transferring funds between them easy. - Read More
  • Loyalty Programs
    A means of incentivizing people to use specific cards, often via loyalty cards that can be used to earn loyalty points which can often be redeemed for various perks and discounts. - Read More
  • m

  • Magnetic Stripe
    A stripe of magnetized iron particles embedded on the back of a credit or debit card containing the cardholder’s account information. Sometimes in tandem with EMV chips, they’re used to complete transactions at a merchant point of sale. - Read More
  • Margin
    Used to calculate the variable interest rate, this is the number of percentage points added to the prime rate by lenders. This information is disclosed on a borrower’s monthly statement, as well as the agreement signed when opening an account. - Read More
  • Merchant Agreement
    A contract between a bank and a merchant outlining their rights, responsibilities, and warranties in relation to the handling and processing of bank cards. - Read More
  • Merchant Bank
    A financial institution that provides underwriting, business loan services, and financial advisory services to merchants. Many are considered to be experts in international trade and do not provide banking services to the public. - Read More
  • Merchant Category Code
    Also known as an MCC, a merchant category code is a four-digit number used to classify a business by the type of goods or services it provides. Provided by the credit card processing network, an MCC is required for a merchant to accept payment via credit card and is used by card issuers to(...) - Read More
  • Minimum Finance Charge
    The smallest amount of interest that borrowers must pay to their credit card company when they carry a balance from one billing cycle to the next. - Read More
  • Minimum Payment
    The smallest total amount of money that borrowers must pay according to their monthly credit card statement. This total can be calculated to include all fees (such as late fees) and interest due that month plus a percentage of the minimal amount that is owed, or in some cases, 2% to 5% of the(...) - Read More
  • Money Market Rate
    A rate used as a reference to calculate the average rate of interest on bank funds, such as the London Interbank Offered Rate. - Read More
  • Monthly Periodic Rate
    A portion of the formula that financial institutions use when calculating the monthly interest rate that a credit card holder will be charged (by multiplying it by the remaining outstanding balance on the card). - Read More
  • Monthly Statement
    Also known as a “billing statement” or “periodic statement”. The detailed activity records for a particular account during a specific month, usually physically mailed to credit card holders or available for them to view online. - Read More
  • n

  • National Bank
    Also known as a “central bank”. A commercial bank chartered by the United States federal government. The source of many credit cards in the U.S., it is mandatory that they are both members of the Federal Reserve System and the FDIC. - Read More
  • National Issuers
    Credit card companies that issue credit cards to consumers on a large scale across all 50 U.S. states, rather than just in a certain region or state. Many national issuers often widely recognized as a household name by the public, - Read More
  • Negative Cash Flow
    The opposite of positive cash flow, negative cash flow is a term that refers to a situation where the cash outflow for a business is higher than the cash inflow for a set period. It does not necessarily equate to losses for a business, and although a business can operate with negative cash(...) - Read More
  • Negative Information
    The critical financial information in a credit report following a prospective borrower's evaluation that would make it more difficult for a person to qualify for a loan. - Read More
  • Net Pay
    Also known as “net income” and "take-home pay". The amount of money remaining on an employee's paycheck after assessing all taxes and deductions, such as contributions towards Social Security, retirement accounts, and health insurance coverage. - Read More
  • Net Worth
    The total difference between the assets and liabilities of an entity, such as an individual or corporation, which is used as a measurement of wealth. - Read More
  • New Balance
    The remaining amount that a credit card holder still owes at the end of a billing period as shown on their monthly statement. This balance is equal to the old balance on the account minus payments made to the total sum, plus any additional credits, fees, or interest accrued. - Read More
  • NFC
    Also known as “near field communication”. The wireless technology that permits the exchange of data between two devices physically within close proximity to each other, such as an NFC-enabled credit card or smartphone and a card reader. - Read More
  • No Credit History
    Different from having “bad credit”, having no credit history can result from never being listed on a credit card account, not using a credit card product in months, or only recently applying for a card and not yet approved or declined. - Read More
  • o

  • Office of Comptroller of the Currency
    Also known as the “OCC”. The federal agency that regulates the banks issuing credit cards in the United States. A division of the Treasury Department. - Read More
  • Online Bill Presentment and Payment
    Also known as “electronic bill payment and presentment”. The paperless process by which a consumer can instantly receive and pay their bills over the web using any internet-ready electronic device, such as a computer, smartphone, or tablet. - Read More
  • Open-End Loan Products
    Financial products, such as credit cards, which borrowers can use up to a set limit and lenders can change the terms of depending on the behaviors of the borrower. - Read More
  • Open-Jaw Travel
    Travel where the arrival and departure destinations differ on both legs of a flight. An example of open-jawed travel is when a flight departs from Point A and lands at Point B, while the return flight departs from Point C to Point A. - Read More
  • Opt Out
    The ability that consumers gained per the Credit Card Act of 2009 to opt out of interest rate increases and term changes. Issuers must provide consumers a 45-day advance notice of these changes, and consumers must pay their debt within five years should they reject said rate increases. - Read More
  • Over-Limit
    Also known as “overlimit”. When a cardholder’s due balance is greater than their credit limit. Card issuers may charge a fee at this point or decline attempts to make any other transactions at a merchant point of sale. - Read More
  • Over-Limit Fee
    The fee charged by some credit card issuers when a card holder’s balance is greater than their card's current credit limit. - Read More
  • Overdraft Protection
    An account service that transfers funds from one bank account to another when a cardholder attempts to withdraw funds or make a purchase in an amount greater than the one available to them, preventing overdraft fees. - Read More
  • p

  • Partner
    Another company that participates in a reward program. Partners can be any company that provides a product or service, including retailers, restaurants, airlines, hotels, etc. - Read More
  • Payment Due Date
    The monthly date by which a credit card holder is to make a minimum payment on their account before being assessed a late fee. - Read More
  • Payment History
    The record of a consumer’s habits when making payments over time used by lenders when evaluating potential borrowers, such as when requesting a loan or applying for a credit card. - Read More
  • Penalty Rate
    Also known as a “default rate” or “default APR”. This is the interest rate triggered when a credit card holder is late making a monthly payment. A card’s penalty rate is generally much higher than its standard APR. - Read More
  • Per Transaction Fees
    A fee that merchants are subject to each time that a credit card or debit card is used to make a transaction at the point of sale. - Read More
  • Periodic Statement
    Also known as a “billing statement” or “monthly statement”. The official record created by a financial institution that lists all of the transactions for an account during a billing cycle regularly sent to consumers monthly either by mail or online. - Read More
  • Personal Identification Number
    Also known as a “PIN” or “password”. A string of numbers in a specific order that is used to verify a card holder’s identity when making a transaction at a merchant point of sale. - Read More
  • Piggybacking
    Also known as “credit card piggybacking”. A person with a good credit standing who adds a person with poor credit on their credit card as an authorized user in order to help them improve their credit score. - Read More
  • PIN Cashing
    A type of fraud which grants access to a consumer’s account using stolen personal data, often resulting in a loss of funds and long-lasting damaging effects on their financial standing due to identity theft. - Read More
  • Plastic
    A casual term that refers to a payment card, be it credit, debit, or charge. This term originates from the fact that payment cards are traditionally made of plastic. - Read More
  • Point of Sale
    The physical or virtual space where a customer can exchange payment for the goods and/or services provided by a merchant. - Read More
  • Point of Sale Terminal
    The hardware used by merchants when exchanging customer payments for goods and/or services at the point of sale, such as a card reader. - Read More
  • Pooling
    When two frequent flyers combine their miles or points to redeem awards. Usually only permitted between family members. - Read More
  • Positive Cash Flow
    A term that is used to describe the process by which a business ensures that it does not spend more in the short-term than it is earning or bringing in. A business that follows this process is often described as "cash flow positive" - meaning that the business has more money coming in than(...) - Read More
  • Post Date
    The date when a credit card issuer posts a transaction that a cardholder has made and applied it to their account balance. - Read More
  • Preapproval
    Also known as pre-screening. The evaluation process carried out by lenders in which they screen potential borrowers to determine their qualifications before continuing the application process, as in with a loan or credit card. - Read More
  • Preapproved
    A person or business that has qualified based on a lender’s criteria during the pre-approval screening process. Used when applying for a loan or credit card, this generally includes a credit evaluation and other factors. - Read More
  • Prepaid Card
    Also known as a “reloadable card”. A card that withdraws money from an account that the cardholder has deposited funds into (which determines their credit limit) rather than a credit line. - Read More
  • Prime Borrower
    Credit card holders with a history of paying their debts on schedule and an excellent credit score, often earning them low interest rates. - Read More
  • Prime Credit
    A credit score designation in which consumers are recognized as having an excellent credit score and paying their balances on time, making them less likely to be risks to lenders. - Read More
  • Prime Rate
    Also known as the “prime lending rate”. The interest rate that preferable customers not likely to default are charged by banks. The prime rate is 3% above the federal funds rate as determined by the Federal Reserve. - Read More
  • Processing Date
    The date on which a transaction is processed and settled by an acquiring bank. - Read More
  • Promotional Rate
    Also known as an “introductory rate” or “teaser rate”. The annual percentage rate offered to new credit card applicants for a limited period of time when they initially obtain their credit card. As a result of the Credit Card Act of 2009, the promotional rate must last for at least six months. - Read More
  • Purchase Rate
    Also known as the “Purchase APR”. The interest rate that a credit card holder is charged when making purchases using their credit card. - Read More
  • q

  • Qualification Period
    The limited period of time during which a cardholder must trigger a qualifying action, such as transferring a balance or making a certain amount of purchases, in order to receive promotional benefits being offered. - Read More
  • Qualifying Ratio
    The ratios that lenders use to determine if a borrower qualifies for a loan during the underwriting process, such as a mortgage. - Read More
  • r

  • Refund
    The act of crediting a party's account for a previous transaction. A refund is usually done when a product is returned or when an error is committed by the merchant's side of the transaction process. - Read More
  • Regulation Z
    A regulation that led to the implementation of the Truth in Lending Act. This regulation requires credit card issuers to disclose the true cost of owning and using a credit card to customers when they open an account, as well as at regular intervals thereafter. - Read More
  • Reloadable Card
    Also known as a “prepaid card” or “stored card”. This is a card that withdraws funds from an account with a limit determined by the amount of money that the cardholder deposits into it rather than a line of credit when making a purchase. The credit limit on a reloadable card is determined by(...) - Read More
  • Remote Deposit Capture
    Also known as “RDC”. A consumer’s ability to deposit a check into their bank account digitally via a picture taken with their web-enabled digital devices, such as a smartphone or tablet. - Read More
  • Repayment Plan
    A structured plan in which borrowers repay outstanding debts owed to lenders over a fixed period of time. - Read More
  • Returned Payment Fee
    The fee that an account holder pays to a financial institution, such as a bank, when a check they have written has bounced while trying to pay for goods or services at a merchant point of sale. - Read More
  • Revolver
    A name for an individual who repeatedly pays off balances over time or carries a balance over more than one billing period. - Read More
  • Revolving Balance
    The remaining debt that is unpaid on a credit card at the end of a billing cycle. Borrowers will be charged interest on their revolving balance until it has been completely paid off. - Read More
  • Revolving Credit
    A line of credit that allows you to pay all or part of a balance incurred over time, specifically multiple billing periods, thereby causing it to revolve. The incurred balance becomes available again for future use once it has been paid off. - Read More
  • Rewards Card
    A type of credit card that allows the user to earn benefits when the card is used to make transactions. These benefits often include cash back or points, which can often be redeemed for discounts or exclusive items at specific merchants, further incentivizing the use of the reward card. - Read More
  • Rewards Earning Ratio
    The timeframe it takes a typical rewards program member to earn a particular reward. - Read More
  • Risk-Based Pricing
    Risk-Based Pricing refers to offering consumers an interest rate based on their history of paying their debts on time and having an excellent credit score. Prime borrowers are more likely to have lower interest rates due to their creditworthiness. - Read More
  • s

  • Schumer Box
    A table included in the terms and conditions of a credit card that lists rates and fees in order to easily compare it to other credit cards. A Schumer Box includes details such as a credit card’s purchase APR, over limit fee, annual fee, and more. - Read More
  • Secured Credit Cards
    Often used by individuals with little to no credit, these credit cards require collateral (such as a cash deposit, home, or another valued asset) in order to be approved. - Read More
  • Security Code
    The three- to four-digit sequence of numbers printed on the back of a credit card that is used to verify ownership when at a merchant's point-of-sale. - Read More
  • Service Charge
    A finance charge that is collected in exchange for a performing some sort of action or service. For example, if you purchase entertainment tickets online instead of at the physical box office, a service charge may be imposed for conducting the transaction online. - Read More
  • Settlement Bank
    A bank that receives and reports the settlement of a transaction between two parties. Settlement banks are often partnered with merchants, and they're a key player in the transaction process. - Read More
  • Spending Category
    Often called a bonus category, a spending category denotes the classification of a purchase into a grouping based on the type of purchase made. Types of purchases can include travel, dining, shopping, gasoline, and much more. A spending category is a broad categorization. - Read More
  • Standard APR
    Also known as the “go-to rate”. The standard APR is the percentage rate that applies to a credit card balances for purchases following the introductory period. - Read More
  • Statement
    The record prepared by a bank or financial institution that lists the transactions made for a certain account within a set billing cycle. Statements are commonly sent monthly to account holders either via mail or online and can be requested in different intervals for a number of financial(...) - Read More
  • Statement Balance
    The amount of total credit card transactions that are reflected on your statement generated at the end of your current billing cycle on the account statement closing date. This balance must be paid by your due date in order to avoid paying interest rate charges. - Read More
  • Status Match
    The process in which a new frequent flyer program member receives a fast-track to higher tiers based on their membership in competitor frequent flyer programs. - Read More
  • Stoozing
    Also known as “arbitrage”. The act of profiting on the interest rate difference between money that is received and money paid by making minimum payments on a low-interest (or free) loan deposited in a high-interest account. - Read More
  • Stored-Value Card
    A stored-value card is a card issued by banks that is embedded with a computer chip and stores information denoting its specific monetary value. - Read More
  • Student Credit Cards
    Student credit cards are credit cards aimed primarily at high school or college students who are just starting to build their credit history. Student cards typically offer low credit limits, but they do include perks such as cash back rewards, tools like FICO® score monitoring, and reporting(...) - Read More
  • Subprime Credit Card
    A type of credit card that is intended for use by consumers with little to no credit. These cards often carry higher interest rates and fees when compared to credit cards for individuals that have more creditworthiness. - Read More
  • t

  • Tabling
    A marketing method by which credit card companies encourage students to sign up for credit cards by setting up tables near universities and offering them free gifts, including t-shirts, movie passes, free meals, and other perks. - Read More
  • Teaser Rate
    Also known as the “introductory rate”. The period when first signing up for a credit card during which the interest charged is lower than the card’s standard APR. - Read More
  • Terms and Conditions
    The formal legal document in which an issuer extensively describes the specific rules and regulations that apply to their credit card, which must be followed by cardholders. - Read More
  • Thin File
    A problematic designation used to describe a limited credit history, likely to deter lenders from approving loans due to a borrower’s minimal experience. - Read More
  • Tiered Rewards
    An incremental rewards structure in which credit card users earn cash back, points, or other benefits based on how much they spend, incentivizing more expensive purchasing habits. - Read More
  • Total Finance Charge
    What a consumer pays when borrowing money with a credit card. This is equal to the sum of the amount of money that a person borrows with a credit card plus the interest owed. - Read More
  • Transaction
    The exchange of payment for goods and/or services between customers and merchants at a physical or virtual point-of-sale, such as a retail store. - Read More
  • TransUnion
    TransUnion is a credit reporting agency located in the United States. As one of the three major credit bureaus, TransUnion aggregates information about the financial behavior of more than 1 billion individual consumers in more than thirty countries across the globe, as well as more than 65,000(...) - Read More
  • Travel Notification
    Notifying an issuer before domestic or international travel in order to keep a credit card from being flagged for fraud under suspicion of identity theft. This can be completed in person at a financial institution, over the phone, or online via a website or app. - Read More
  • Truth in Lending Act
    Also known as “TILA” and the “Consumer Credit Protection Act”. The Truth in Lending Act is a federal law that was enacted in 1968. Under Regulation Z of the Truth in Lending Act, credit card issuers must disclose credit card terms and conditions to consumers so that they can make informed(...) - Read More
  • Truth in Savings Act
    The Truth in Savings Act is a federal law that was enacted in 1991 as part of the FDIC Improvement Act of 1991. Under Regulation DD of the Truth in Savings Act, banks and other similar institutions must disclose all of the rates and fees associated with deposit accounts. - Read More
  • Two-Cycle Billing
    Also known as “double-cycle billing” or “dual-cycle billing”. The method used by credit card issuers to calculate the interest that must be paid on the balances that remain on credit cards from one billing cycle to the next, instead of just the most recent balance. This practice was banned by(...) - Read More
  • u

  • UDAAP
    Per the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, this is the acronym for “unfair, deceptive, or abusive acts or practices”. The Dodd-Frank Act makes it illegal for consumer financial product or service providers to participate in UDAAP. - Read More
  • Universal Default
    The means by which credit card issuers raised the interest rates that cardholders paid if they were late on any payments made to anyone. In the Credit CARD Act of 2009, this practice was restricted to only allow increases on new balances, as well as existing balances that were delinquent for(...) - Read More
  • Unsecured Credit Card
    A credit card that has been issued without collateral, based on the consumer’s financial history and credit score (among other factors). - Read More
  • User Authentication
    The practice of authenticating a credit card holder’s identity when they attempt to use the card at a merchant point of sale for goods and/or services. - Read More
  • Usury
    The practice of lending money at an unreasonably high interest rate. These rates are capped in some U.S. states to protect investors against predatory lending. Certain credit card issuers have circumvented these laws by moving their company headquarters to states where they do not apply. - Read More
  • Utilization Ratio
    Also known as the “balance-to-limit ratio” and “debt-to-limit ratio”. Used when calculating your credit score, this is the comparison of your available credit against any outstanding balances you may have. Having a lower utilization ratio makes you less of a credit risk and generally qualifies(...) - Read More
  • v

  • Validation Code
    Also known as a “CVV”. A collection of three to four numbers on a credit card used to validate retail purchases made over the phone or online. - Read More
  • Variable Interest Rate
    Also known as a “floating rate”. A fluctuating interest rate calculated using an index that can go up or down, in turn increasing or decreasing interest payments on your loan or credit card. - Read More
  • Visa
    One of the largest debit card and credit card transaction processors in the United States, which uses its own payment network that includes millions of merchants and card users. - Read More
  • Visa Issuer
    A financial institution that issues a Visa-branded debit card or credit card to consumers in order to purchase goods and/or services. - Read More
  • Visa Merchant
    A merchant that accepts Visa debit cards and credit cards as forms of payment in their establishment in exchange for goods and/or services. - Read More
  • Void
    Nullifying a customer transaction for goods and/or services made at a merchant point of sale which has not yet been settled. - Read More
  • w

  • Wall Street Journal Prime Rate
    The average prime rate of the 10 largest banking institutions in the United States, as calculated by a market survey and published in the Wall Street Journal. - Read More
  • x

  • X
    Also known as “Regulation X”. A Federal Reserve Board rule that imposes limits on the maximum amount of credit that financial institutions, such as banks, can buy. - Read More
  • y

  • Yield on Earning Assets
    The calculation used to determine the solvency of a financial industry, which assesses its interest income and compares it to its earning assets, resulting in a percentage. - Read More
  • z

  • Z Score
    Developed by New York University professor Edward Altman in 1968, this is a calculation model that is used to determine whether or not a financial institution, such as a bank, will go bankrupt. - Read More
  • Zero Balance
    The state of having no debt on your credit card. A zero balance credit card has no outstanding balance as a result of the cardholder paying it in full, which may help raise their credit score. - Read More
  • Zip-Zap Machine
    A machine used to manually record the embossed numbers on a credit card at a retailer point of sale by making an impression onto carbon paper receipts. - Read More

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