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Credit Card Definitions and Terms
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|Credit Card Glossary Terms
Affinity Card - A card offered in conjunction with an organization and a credit card issuer. A certain percentage of the finance charges generated from cardholders are donated to the charity or organization featured on the card.
Air Miles - Miles that can be used for free travel or other discounts, and are earn each time you use your card. Most major U.S. Airlines offer these cards. Airline Miles are often referred to as Frequent Flyer Miles.
Annual Fee - A fee charged by the card issuer for being a card holder. This type of fee is most commonly associated with frequent flyer credit cards or cards designed to help ou rebuild your credit.
Annual Percentage Rate (APR) - The yearly percentagerate of the finance charge. The annual percentage rate will be a fixed or variable rate. See "Fixed Rate" or "Variable Rate" for descriptions.
Average Daily Balance - The average account balance for a billing cycle. Your finance charge will be based on this balance. You can figure out your average daily balance by adding the balances of each day of the cycle together and then divide them by the number of days in the cycle.
Balance Transfer - The act of transferring the whole or partial balance of one credit card to another credit card. This is usually done if the balance is being transferred to a card with a lower annual percentage rate.
Balance Transfer Fee - A fee that may be charged to cardholders for transferring a balance from one card to another.
Billing Cycle - The days between the last statement and the current statement. Billing cycles generally range from 20 to 32 days.
Cash Advance - Obtaining cash from the card instead of using it to make a purchase. The Grace Period does not apply to cash advances. See "Grace Period" for more information.
Cash Advance Fee - A fee charged for using your card to obtain cash. The fee will be a percentage of the transaction or a flat fee. Higher interest rates generally apply to cash advances.
Charge Card - Different from a credit card as they generally have an annual fee and require the balance to be paid monthly.
Classic Card - The Visa version of a basic credit card. Generally has a lower credit limit. The Mastercard version is a Standard Card.
CO-Branded - A card usually offered in conjunction with a major merchant and a credit card issuer.
Debit Card - A card issued by the cardholder's bank that may be used to make purchases or get cash from ATMs. Each purchase will deduct money from the cardholder's checking account and works much like a check.
Fair Credit Billing Act - An Act passed by Congress in 1975 to help cardholders resolve billing problems with issuers. The Act gave cardholder certain rights when dealing with credit card issuers. Click to View the Fair Credit Billing Act. **link that to the Fair Credit Billing Act Page**
Finance Charge - The amount of interest charged to an account for the billing cycle.
Fixed Rate- A fixed annual percentage rate of the finance charge.
Frequent Flyer Miles - Miles that can be used for free travel or other discounts, and are earn each time you use your card. Most major U.S. Airlines offer these cards. Frequent Flyer Miles are sometimes referred to as Airline Miles.
Gold Card - A credit card issued by issuers that may include added benefits not offered with a Classic or Standard credit card. The credit line is generally between $2,000 and $5,000.
Grace Period - The time allowed to pay your balance without being charged a finance charge. Usually 25 to 30 days.
Interest Rate - The yearly percentage rate of the finance charge. The interest rate will be a fixed or variable rate. See "Fixed Rate" or "Variable Rate" for descriptions. The Interest Rate is also known as the Annual Percentage Rate (APR).
Introductory Rate - A low interest rate offered for a limited time, usually for the first 3 to 6 months on being a cardholder. Commonly known as a "Teaser Rate" for persuading cardholders to apply.
Late Payment Fee - A fee charged to a cardholder's account once a payment is overdue.
Mastercard - An institution that lincenses it's brand to member banks for use on credit cards and other products.
Minimum Monthly Payment - The minimum amount of the balance a cardholder is required to pay to keep the account in good standing.
Over Credit Limit Fee - A fee charged if your balance exceeds your credit limit.
Periodic Rate - The interest rate of a specified period of time, usually referred to as a monthly periodic rate or daily periodic rate.
Pre-Approved - A person who has passed the preliminary screening for the credit card. The person will still need to have their credit checked.
Platinum Card- Usually offered to people with higher incomes and a good credit history. This card has a minimum credit limit of $5,000 and may include member benefits.
Prime Rate - The lending rate set by the Federal Reserve to banks. Currently 9.5%
Rebate Card - Allows a cardholder to earn points or money to get cash, merchandise, or services for using the card.
Secured Card - A card that is secured by a savings account opened with the issuer. The card is designed for people who are looking to rebuild their credit, but are having trouble getting an unsecured card. See "Unsecured Card" for details.
Standard Card - The Mastercard version of a basic credit card. Generally has a lower credit limit. The Visa version is a Classic Card.
Titanium Card - Usually offered to people with higher incomes and a good credit history. This card has a credit limit above the Platinum level and may include member benefits.
Truth in Lending Act - A law requiring lenders to provide information giving borrowers the ability to compare one loan to another.
Unsecured Card - A credit card that is not secured by collateral. Unsecured cards are the majority of cards issued.
Variable Rate - A rate that can increase or decrease with the changes of the Prime Rate or London Interbank Offer Rate (LIBOR).
Visa - An institution that lincenses it's brand to member banks for use on credit cards and other products.