Understanding a Credit Card
About this set
Created by:
SHendrickson on January 5, 2012
Description:
Credit card terminology for personal finance.
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25 terms
Terms | Definitions |
|---|---|
 Annual fee | A yearly fee that may be charged for having a credit card |
| Annual percentage rate (APR) | The cost of credit expressed as a yearly interest rate |
| Balance transfers | The act of transferring debt from one credit card account to another |
| Borrower | The person or organization that is receiving money from a lender |
| Closed-end credit | A loan which the borrower must repay the amount in a specified number of equal payments |
| Credit | When goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date |
| Creditworthiness | An individuals' ability and willingness to pay the money back |
| Credit application | A form requesting information about a person's ability to repay credit |
| Credit card | Pre‐approved credit which can be used for the purchase of goods and services now and payment of them later |
| Credit investigation | A comparison of information on a credit application to information on a credit report |
| Credit limit | The maximum dollar amount that can be charged to a credit card |
| Credit report | A record of a consumer's credit history that includes information about credit card use as well as the use of other types of credit |
| Credit score | A number that summarizes an individual's credit record and history |
| Debit card | A plastic card which looks like a credit card but is electronically connected to the cardholder's bank account |
| Interest | The price of money |
| Introductory rate | The APR charged during the credit card's introductory period after a credit card account is opened |
| Late payment fee | Fee charged when a credit card holder does not make the minimum monthly payment by the due date |
| Lender | The person or organization who has the resources to provide a borrower with a loan |
| Open-end credit | Extended as a line of credit established in advance so that the borrower does not have to apply for credit each time new credit is desired |
| Over-the-limit fee | Fee charged if the credit card account balance goes over the set credit limit |
| Penalty APR | The interest rate charged on new transactions if the penalty terms in the credit card contract are triggered |
| Pre-approved | When someone has passed an initial credit check |
| Prime rate | An index that represents the interest rate most banks charge their most creditworthy customers |
| Schumer Box | Displays the main costs of a credit card |
| Variable-rate APR | An APR that may change depending on other factors, such as the prime rate |
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