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Credit Card Terms & Definitions

A

Airline Credit Card
Annual Fee
If you travel regularly on the same airline and do so often enough so that the benefits from the card justify the annual fee, an airline credit card can be a good choice for you. The more you take a particular airline, the more you will be able to redeem miles for free flights or seat upgrades and use those rewards for the flights you want.Find more Airline Credit Cards. Find More Airline Credit Card
An annual (yearly) fee charged by a credit card company each year for use of a credit card. This is a separate fee from interest rate on purchases. While annual fees were once common, they largely disappeared in the '80s and '90s, remaining only on a few classes of cards, such as secured cards or those that offer airline frequent flyer miles as a reward.

B

Balance Transfer Check
Balance Transfer Credit Card
Balance Transfer Fee
Business Credit Card
A balance transfer check is something that a credit card company may send to you in the mail. It often comes with a temporary promotional APR offer that could incentivize you to transfer debts to a new or existing credit card. But balance transfer check offers can be tricky, so it’s important to understand how to use them and when to pass on the offer.
Balance transfer credit cards give people the opportunity to transfer from a high-interest credit card to a lower-interest credit card. They also can help cardholders save a lot of money they need to pay for interest. For example, if you have a high balance on a reward credit card at 23% APR, you can transfer the debt to a balance transfer credit card with a lower rate during the introductory period, so you can save money on interest and pay down your debt faster. However, you can only transfer an amount up to your credit limit on the new credit card.Find more Balance Transfer Credit Cards. Find More Balance Transfer Credit Card
A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. (In some cases, you may be charged a fee to complete the balance transfer—typically a percentage of the transfer balance.
The business credit card is a type of credit card intended for business use rather than personal use and it is suitable for businesses of all sizes. Business credits card can provide a convenient way to increase their company’s purchasing power and easy access to manage business transactions.Find more Business Credit Cards. Find More Business Credit Card

C

Cash Advance
Cash Advance Apr
Cash Advance Fee
Cash Back Credit Card
Cash Back Rewards
Contactless Payment
Credit Card
Credit Card Issuer
Credit Card Network
Credit Report
Credit Score
Current Balance
A cash advance is a service provided by most credit card and charge card issuers. The service allows cardholders to withdraw cash, either through an ATM or over the counter at a bank or other financial agency, up to a certain limit. For a credit card, this will be the credit limit (or some percentage of it).
The cash advance APR is the annual percentage rate of interest you have to pay for credit card cash advances. It's typically higher than the APR for ordinary purchases. If you have a credit card with a special introductory rate, that rate usually doesn't apply to cash advances. A cash advance APR may be as high as 25 percent.
A credit card cash advance fee is what the credit card company charges you to make a cash advance. Most companies charge a flat fee or percentage of the transaction – whichever is greater. You can make the transaction at a bank or ATM, or by cashing checks provided by your credit card company at your local bank.
As the name implies, cash back credit cards reward your expenses with cash. The cash back amount you get is set to the percentage rate. How much money you can get, or you can have is unlimited. Cash back can be redeemed for your balance, credit card shopping portal, gift card or statement deposited in a bank account. Find more Cash Back Credit Cards. Find More Cash Back Credit Card
A cashback reward program is an incentive program operated by credit card companies where a percentage of the amount spent is paid back to the card holder. Many credit card issuers, particularly those in the United Kingdom and United States, run programs to encourage use of the card where the card holder is given points, frequent flyer miles or a monetary amount. This last benefit, a monetary amount, is usually known as cashback or cash back reward.
Contactless payment is a secure method for consumers to purchase products or services via debit, credit or smartcards (also known as chip cards), by using RFID technology or near-field communication (NFC).
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's promise to the card issuer to pay them for the amounts so paid plus the other agreed charges. The card issuer (usually a bank) creates a revolving account and grants a line of credit to the cardholder, from which the cardholder can borrow money for payment to a merchant or as a cash advance. In other words, credit cards combine payment services with extensions of credit.
A credit card issuer is a bank or credit union who offers credit cards. The credit card issuer extends a credit limit to cardholders who qualify for the credit card. When consumers make credit card purchases, the credit card issuer is responsible for sending payments to merchants for purchases made with credit cards from that bank.
Credit card networks are the bridge between merchants — the shops that accept your credit card — and the banks that issue the credit cards themselves. Of the networks, you’ll find four major players: Visa, Mastercard, American Express and Discover. Visa’s network owns the wide majority of the market share worldwide, followed by Mastercard, Discover and American Express. Networks set the fees that a retailer pays when you swipe your card for purchases. Called interchange fees, these costs can vary by credit card brand, swipe location and transaction type — for instance, in a store, online or by phone. In the US, merchants typically pay to the network about 2% of your total transaction in fees. Credit card networks also: Decide where credit cards can be accepted. Approve and process transactions. Facilitate payments among cardholder, merchants and issuers. Networks don’t determine fees that a cardholder pays, like your card’s annual, overlimit, interest, late or foreign transaction fees. They also are not responsible for customer service
A credit report is a compilation of the credit history of an individual or business. It is compiled by one or more of the credit bureaus and contains the detailed history of borrowing, payment behavior and credit inquiries. Credit reports are viewed by lenders in deciding whether to extend credit and on what terms. Credit reports are distilled using complex formulas, into three-digit numbers called credit scores
A credit score, also known as a credit rating, is a number that reflects the likelihood of you paying credit back. Lenders like banks and credit card companies will look at your credit file when they calculate your credit score, which will show them the level of risk in lending to you. The higher your credit score, the better your chances of being accepted for credit, at the best rates.
Current balance is the balance in your account with all transactions taken into account.

D

Debit Card
A debit card (also known as a bank card, plastic card or check card) is a plastic payment card that can be used instead of cash when making purchases. It is similar to a credit card, but unlike a credit card, the money comes directly from the user's bank account when performing a transaction. Some cards might carry a stored value with which a payment is made, while most relay a message to the cardholder's bank to withdraw funds from a payer's designated bank account. In some cases, the primary account number is assigned exclusively for use on the Internet and there is no physical card. In many countries, the use of debit cards has become so widespread that their volume has overtaken or entirely replaced cheques and, in some instances, cash transactions. The development of debit cards, unlike credit cards and charge cards, has generally been country specific resulting in a number of different systems around the world, which were often incompatible. Since the mid-2000s, a number of initiatives have allowed debit cards issued in one country to be used in other countries and allowed their use for internet and phone purchases. Unlike credit and charge cards, payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of them paying the money back at a later date. Debit cards usually also allow for instant withdrawal of cash, acting as an ATM card for withdrawing cash. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash along with their purchase.

F

Fico Score
Fixed Interest Rat
Flat Rewards
Foreign Transaction Fee
The FICO mortgage score, FICO personal finance score, and FICO score XD 2 are between 300 and 850. Higher scores indicate lower credit risk.The FICO classic score lower than 620 is a bad score, 620-649 is poor, 650-699 is fair, 700-749 is good, and 750 and over is excellent.
A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. Variable rate loans, by contrast, are anchored to the prevailing discount rate.
Tiered rewards programs give higher rewards to cardholders who spend more. The credit card company sets the different spending thresholds to which different reward earning rates apply.
A foreign transaction fee, sometimes referred to as an FX fee, is a surcharge on your bill that appears when you make a purchase that passes through a foreign bank, or is in a currency other than the U.S. dollar (USD). The most common FX fee that credit card issuers tack onto your bill is around 3%.

G

Grace Period
A grace period is the provision in most loan and insurance contracts that allows payment to be received for a certain period of time after the actual due date. During this period, no late fees are charged, and the late payment does not result in default or cancellation of the loan. A typical grace period is 15 days.

H

Hotel Credit Card
Hotel credit cards are usually co-branded cards (but not always). This means they are issued by banks such as Chase or American Express and work with specific hotel brands. As you can imagine, the hotel card will reward you with loyalty to the brand and reward your loyalty to airlines and car rental partners. In some cases, you can use this card for general shopping, such as grocery stores, gas stations, and restaurants.Find more Hotel Credit Cards. Find More Hotel Credit Card

L

Late Payment Fee
Low Rate Credit Card
A late fee is a charge a consumer pays for making a required minimum payment on a credit card after the due date. Late fees encourage consumers to pay on time and may vary, though some are typically $25 for the first late payment and $35 for subsequent late payments.
The low rate credit card is a kind of credit card with a lower-than-average interest rate. The rate is lower than the average APR, and could be down to 0% sometimes.Find more Low rate Credit Cards. Find More Low Rate Credit Card

M

Mastercard
Worldwide credit card corporation that works with financial institutions to issue credit cards. The credit cards distributed by the company are done so under the MasterCard brand, which is one of the three major credit cards accepted at vendors across the world.

O

Open/Close-Loop
Over Limit Fee
Open loop and closed loop, in the context of payment cards, are categories that stipulate whether a card can be used in businesses other than that of the card issuer.An open loop payment card is one that can be widely used.Closed loop payment cards are limited in terms of where they can be used.
An over-limit fee is a fee charged when your balance goes over your credit limit (also known as over the limit fee). When cardholders attempt to make purchases that will put them over limit, card issuers used to routinely decline the transactions. In recent years, many card issuers changed their policies and automatically enrolled consumers in programs that allowed the transaction, but then added hefty fees. The Credit CARD Act of 2009 ended the practice of automatically enrolling consumers into over-limit fees, and requires that credit card issuers give account holders the option to opt-in to over-limit fees. Without the consumer's consent, they cannot charge over-limit fees. The act also forbids issuers from charging a fee higher than the amount a consumer is over the limit.

P

Penalty Apr
Purchase Intro Apr
enalty annual percentage rates (APRs) are high interest rates that can be triggered by the slightest infraction such as just one payment that is received a day late. Often these APRs range from 20% to 35%. Lenders increase borrowers' interest rate significantly and profit from their mistakes.
Purchase APR is the annual percentage rate that applies to outstanding balances on purchases made using a credit card. The purchase APR is the interest rate charged on the remaining balance for any purchases made with the card if the total balance of a credit card is not paid in full each month; when the balance is paid in full each month, no purchase APR finance charges are applied.

R

Regular Apr
Returned Payment Fee
Revolving Credit
Reward
Rewards Credit Card
This is the amount of interest that the issuer will add to the balance on revolving debt, known as the annual percentage rate. The higher the interest rate, the higher the charge will be. Conversely, lower APRs will translate into less money being added to whatever debt you don't pay off by the due date. Your credit rating determines the APR you'll be eligible for.
A returned payment fee is a charge a credit card company may assess to a customer's account if the customer attempts to pay a credit card bill with insufficient funds.
Revolving credit is a line of credit where the customer pays a commitment fee to a financial institution to borrow money, and is then allowed to use the funds when needed. It usually is used for operating purposes and the amount drawn can fluctuate each month depending on the customer's current cash flow needs. Revolving lines of credit can be taken out by corporations or individuals.
Some credit cards only charge you for using their product. But others give incentives for the amount of money you spend with their card. Credit cards rewards come in different forms, but they all give you a benefit for using your card more. In general, you earn a certain number or percentage of rewards for every dollar you charge on your credit card. Some cards reward you more for spending in certain areas or may only give you rewards on certain purchases.
Some credit cards only charge you for using their product. But others will reward you for the amount of money you spend with their cards. Credit cards reward programs come in different forms, but they all give you a benefit for using cards. In general, you earn a certain number or percentage of rewards for every dollar you charge on your credit card. Some cards reward you more for spending in certain areas or may only give you rewards on certain purchases. According to statistics, 45% of Americans make the reward card as their first choice when they want to apply for a new credit card. If you choose carefully and take care to avoid potential pitfalls, you can benefit greatly from rewards credit cards, and even use them to help improve your credit scores. Find more Rewards Credit Cards. Find More Rewards Credit Card

S

Secured Credit Card
Sign-Up Bonus
Smart Chip
Statement Balance
Store Credit Card
Student Credit Card
A secured credit card works just like a regular credit card, cardholders can use the card anywhere the card is accepted. But you need to put down the deposit against the card’s credit limit used as collateral on the account which will be used when the cardholder default. Usually these cards are used by people with limited credit histories. In reasonable use, secured credit cards can help cardholders to build credit or repair credit. Find more Secured Credit Cards. Find More Secured Credit Card
One of the main ways credit cards try to reel in new customers is by offering a sign-up bonus. After spending a certain amount within the first three months of account opening, you'll earn cash back, rewards points or travel miles in quantities that far outstrip the card's standard rewards-earning rate.
Smart Chip is a credit card technology where cards are embedded with chips and a cardholder must put in their pin or sign for each transaction to be approved.
The statement balance is the balance that was printed on your most recent credit card billing statement. It's your credit card balance as of your account statement closing date, which is the date your billing cycle ended and your credit card statement was generated.
The only difference between store credit cards and regular credit cards is that store credit cards are branded and associated with a specific retailer and its rewards program. Store credit cards offer in-store discounts, allow cardholders to earn and redeem points when making purchases. Find more Store Credit Cards. Find More Store Credit Card
Student credit cards are primarily marketed to school users who do not have a credit card of their own name. They can be a good way to solve the problem of ""no credit history and no credit card"". Student credit cards allow you to borrow a certain amount of money each month. You can then choose to pay off the balance in full over a period of time (interest expense) or at the end of each billing period. Student credit cards can help you get rewards and, in some cases, short-term interest-free financing. More importantly, the student credit card is the first step in establishing a good credit history, which is essential for getting a preferential interest rate on future loans, renting your own apartment and getting low insurance premiums. Some credit card issuers even offer special rewards to student cardholders who have achieved outstanding results in school. Find more Student Credit Cards. Find More Student Credit Card

T

Tiered Rewards
Transfer Intro Apr
Travel Credit Card
A tiered reward is a rewards earning calculation that is typically disclosed as "up to" a certain percentage cash back. As card users spend more, they increase the percentage of their rewards, up to a maximum. For example, a tiered reward offer could involve 0.25 percent for the first $1,000 in spending, 0.5 percent for the next $1,000 and 1 percent for all spending over $2,000.
An introductory balance transfer APR offer can give you time to pay down credit card debt with lower interest.
With the increasing number of tourists, there is an increasing demand for travel credit cards. Most travel credit cards can be used not only during holidays, but also for business travel. Travel credit cards for travelers allow you to earn miles while shopping, and they often get more rewards for your travel-related shopping. You can pay for your ticket by mileage, book hotels, and more. You will find that some of these cards are branded by hotels or airlines and allow you to maximize your rewards when spending directly with them. Find more Travel Credit Cards. Find More Travel Credit Card

V

Variable Interest Rate
Visa Card
Visa Payment Network
A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest rates change. As a result, your payments will vary as well (as long as your payments are blended with principal and interest).
A Visa card is any type of payment card utilizing the Visa network and branded by Visa Inc. Cards may include credit, debit or prepaid cards.
Merchant — an entity (business or non-profit) that is authorized to accept Visa-branded cards for the payment of products and services. Acquirer (also known as a merchant bank) — a financial institution and a Visa member that contracts with merchants to accept Visa cards for the payment for goods and services.

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  • Knowing your credit score and what's on your credit report can help you determine what products to apply for. If you have fair credit, for example, you may not want to apply for a card that clearly states that only applicants with excellent credit will be approved.
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