30 terms

Understanding a Credit Card

Credit card terminology for personal finance.
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 transfer
The act of transferring debt from one credit card account to another.
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.
When goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date.
An individual's 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
When a lender does 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.
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.
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. Examples of this kind of credit include credit cards.
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.
Schumer Box
Displays the main costs of a credit card in a credit offer.
Variable-rate APR
An APR that may change depending on other factors, such as the prime rate.
Collection Agency
Businesses hired by lenders to pursue payments on debts that borrowers have not paid back according to the terms of the credit contract.
A person who is equally responsible for paying back debt under the credit terms.
Credit history
A record of the borrower's past loans and credit-related transactions.
Credit Reporting Agencies
Agencies that create credit reports based on the information they receive from lenders regarding a borrower's account history with that lender. Sometimes called credit bureaus.
When a borrower fails to keep up with mortgage payments and the lender takes possession of the property.
Tax lien
A legal claim by a government entity to take an individual's property or income when their taxes are not paid in full.
Credit offer
Often pre-approved, this includes the fine details of a credit agreement including rates, fees and other disclosures. The Schumer Box is included in this.