Glossary of Credit Card Terminology Used

A B C F G I L M O P R S U V

A

Affinity Cards
Offered by non-financial organizations. The organization approaches its members and affinity card gives holders of the card a special discount from the non-financial organization. The organization receives the loyalty of its members who choose to use the card and a small fee from the credit card company itself.

Air Miles Credit Cards
Increasingly popular credit card rewards program offered by co-branded cards. Earn air miles by using the credit card and then the air miles are transferred to the cardholder's account for that respective airline.

Annual Percentage Rate
A yearly interest rate used to assess the cost of the credit received. It amounts to a reflection of the total cost for a year of the interest charged on a loan, this is expressed as a percentage rate. The credit company is legally required to state the APR before you sign on the dotted line for a credit card or any other credit agreement.

Annual Fee
Credit card annual membership fee which is charged by some credit card companies. If there is an annual fee it can range from $25 to $90. Fortunately quite a few major issuers do not charge an annual fee for most of the credit cards such as Chase and Bank of America.

B

Balance Transfer
Moving your credit card balance to a new issuer for benefits such as a lower interest rate.

Balance Transfer Fees
Usually a percentage that is charged for transferring a balance from one credit card to another by the receiving bank for taking on the debt, this is usually cheaper than maintaining the debt at the previous higher interest rate.

Bankruptcy / Insolvency
If you are not longer able to pay off your outstanding debt to the credit card issuer, this could be your final option for protecting your finances. We list many credit cards for people with poor credit.

C

Cash Advance Fee
You can take actual cash from an ATM with your credit card for a fee. The fee can be a per-transaction fee or a percentage of the cash advance. Getting cash by using your credit card is entirely disadvantageous as the fees are relatively high and you are charged interest from the moment you withdraw the cash. Your card issuer may also from time to time send you checks which can also be thought of as a cash advance.

Cash Rebate Credit Cards
This credit card allows you to earn cash with each purchase you make. Card issuers make profit from a variety of sources including annual fees charged to customers, fees such as penalties for late payment, and a small percentage of the cost of each purchase you make with the card, cash rebate cards allow you to get a cut of the percentage the issuer makes.

Co-branded Credit Cards
Credit cards that are issued in an agreement between a bank and a typically large retail company. Many department stores will offer co-branded credit cards offering consumers a special deal on purchases at the store.

Credit Counseling
Company / Organization that will analyze the spending pattern of a consumer and offer counseling and a plan of action to work out an effective debt repayment strategy, working with the creditors of the consumer in question to ensure all parties concerned are happy with progress.

Credit Report Agency
These bureaus make their money by compiling historical patterns of your credit usage. An amazing amount of detail is contained within these reports such as which methods you use to pay regular expenses (obviously excluding cash purchases), also any legal financial difficulties you may have incurred in the past. These reports are available to you or a company you request credit from for a small fee.

Credit Card Repayment Insurance
An insurance policy designed to pay off your credit card debt in the event of you losing your job, dying or become unable to work.

Credit Limit
The maximum amount of credit that is available for spending on your credit card.

Credit Report
Every application you have made for any type of financial credit or insurance of any kind is listed on your credit report. An amazing amount of detail is contained within these reports such as which methods you use to pay regular expenses (obviously excluding cash purchases), also any legal financial difficulties you may have incurred in the past. These reports are available to you or a company you request credit from for a small fee.

It is a wise idea to check your credit report from time to time to be sure that nothing has been reported in error about you from a company you may or may not have had dealings with in the past.

Credit Scoring System
A system which creditors to assess whether or not you are a safe enough risk for credit or loans. Many variables are taken into account from the punctuality of your bill payments, any debt collection agency incidents, and the age of accounts which are currently open in your name. Your details are compared objectively with people in similar social groups to yourself. Higher scores indicate that you are a safer bet for the credit company and more likely to be approved.

F

Fixed Interest Rate
The annual percentage rate is fixed at a certain level.

Foreign Currency Fees
Charge by some credit card issuers for purchases made while overseas in addition to the currency conversion rate of the day.

G

Gold Credit Card
Increased amount of credit over that of a standard credit card. The credit limit is usually between $2,500 and $8,000. A higher income level is required,you will typically be expected to be earning at least $40,000 per year. Gold card users receive additional benefits such as increased insurance for purchases made using the card.

Grace Period
The "interest free" number of days which an issuer gives between the date of your transaction and the date your bill was created. A grace period is usually between 20 to 25 days. If your card includes a grace period, the issuer must mail your bill at least two weeks before the payment due date so you have sufficient time to arrange payment to be made.

I

Interest Free Period
The "interest free" number of days which an issuer gives between the date of your transaction and the date your bill was created. A grace period is usually between 20 to 25 days. If your card includes a grace period, the issuer must mail your bill at least two weeks before the payment due date so you have sufficient time to arrange payment to be made.

Interest Rate
The term used for the charge for borrowing money that is expressed as a percentage of the amount owed.

Introductory Interest Rate
A reduced interest rate charged by an issuer for a short period to encourage customers to make balance transfers to their card. After this introductory period is over, the charged rate increases to the indexed rate or the interest rate.

L

Late Payment Fee
A Penalty fee for not making a payment on time, usually a fixed amount based on failure to make the minimum repayment for that month.

M

Minimum Repayment
The minimum amount of money required to stop the account being reported as a default. typically a fixed amount in the region of $25.

O

Over The Limit Fee
A fee for exceeding the credit limit set on your credit card.

P

PIN (Personal Identification Number)
Typically a four digit number required to validate you as the rightful owner of the card when making purchases.

Platinum Credit Card
Credit card with a more often than not, the highest credit limit and more advantages than either a standard or gold credit card. CreditCardAddition.com offers a large selection of platinum credit cards

Pre-Paid Credit Card
For people with a poor credit history, these mastercard and visa credit cards allow you to pre pay in order to create a usable balance on the card in order to build a usage pattern with these credit card brands to improve your credit rating in general.

Prime Rate
The base interest rate dictated by the large financial institutions, a credit card APR is often based on the prime rate with an additional fixed amount to make a profit.

R

Rewards Credit Card
These cards allow customers to earn rewards such as merchandise, cash rebates or air miles with each use of their credit card.

S

Secured Credit Card
Credit cards made available to people to try and create a good credit rating. Secured cards are tied to bank account funds to ensure a payment of the outstanding balance on the account, the credit rating for these cards will be a high proportion of the typical amount within the bank account.

U

Unsecured Debt
Most credit cards are based around unsecured debt. For additional security to the issuer the APR on credit card borrowing is typically higher than that of a standard loan or mortgage.

V

Variable Interest Rate
This interest rate is variable with time in line with the economy or policies of the issuer.