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Free credit card glossary of credit card terms and definitions. Find the latest credit card terms explained in easy to understand terms. The credit card glossary is designed to help consumers navigate the credit card marketplace. Credit card glossary covers definitions found on new credit card offers for the most popular credit cards promoted by the largest credit card companies. Look up current credit card terms before choosing a new credit card. Learn all of the credit card industry terms for products such as cash back credit cards, introductory credit card rates, credit card balance transfers, business credit cards and more.

To find more information on specific credit card offers for low interest rate credit cards, credit card reward programs, credit cards for balance transfers, student credit cards, business credit cards, credit cards for bad credit, prepaid credit cards, secured credit cards, gas credit cards or cash back credit credit cards see the following pages: balance transfer credit cards,credit cards for bad credit,prepaid credit cards, cash back credit cards, secured credit cards, student credit cards, business credit cards or gas credit cards.

Account Number

Address Verification System

Adjusted Credit Card Balance

Additional Cardholder

Affinity Credit Card

Annual Fee

Annual Percentage Rate

Application

Application Fee

Authentication

Authorization

Authorization Amount

Authorization Date

Authorization Only

Authorized User

Automatic Payments

Available Credit

Average Daily Balance

Bad Credit

Bad Credit Cards

Balance

Balance Transfers

Balance Transfer Fee

Balance Transfer APR

Bank Credit Card

Billing Cycle

Billing Statement

Business Credit Card

Card Member

Card Reader

Cardholder Agreement

Cash Advance

Cash Advance Fee

Cash Advance APR

Cash Back

Charge Back

Charge Back Period

Charge Card

Charge Off

Collection Agency

Co-Signer

Consumer Credit Counseling Service

Consumer Credit Protection Act

Credit

Credit Card

Credit Card Consolidation

Credit Card Issuer

Credit Card Number

Credit Card Processor

Credit Freeze

Credit History

Credit Inquiry

Credit Life Insurance

Credit Limit

Credit Line

Credit Monitoring

Credit Repair Agency

Credit Report

Credit Reporting Agency

Credit Score

Credit Scoring System

Current Credit Card Balance

CVV2

Daily Periodic Rate

Debit

Debit Cards

Debt Consolidation

Default

Default Credit Card APR

Due Date

Electronic Authorization

Electronic Fund Transfer Act

Encryption

Equal Credit Opportunity Act

Expired Credit Card

Fair Credit Billing Act

Fair Credit Reporting Act

Fair Debt Collection Practices Act

Fees

Finance Charge

Fixed Rates

Float

Floor Credit Card Rate

Foreign Credit Card Transaction Fees

Fraudulent Transaction

Fraudulent User

Full Credit Card Payment

Gift Card

Grace Period

Identity Theft

Interest Charges

Interest Rate

Introductory Period

Introductory Rate

Issuer

Joint Credit Card Account

Joint Liability

Late Payment

Late Payment Fee

Liability

LIBOR Rate

Loyalty Programs

Magnetic Stripe

Margin

MasterCard Credit Card

MasterCard Credit Card Issuer

Merchant

Merchant Credit Card Agreement

Merchant ID

Minimum Finance Charge

Minimum Monthly Credit Card Payment

Monthly Periodic Credit Card Rate

National Credit Card Issuers

New Credit Card Balance

No Pre-Set Spending Limit

Online Banking

Online Bill Payment

Opt Out Request

Outstanding Balance

Over the Limit

Over the Limit Fee

Overdraft

Payment Cards

Payment Due Date

Payment Options

Pending Charges

Periodic Rate

Personal Identification Number (PIN)

Point of Sale

Point of Sale Terminal

Posting

Pre-approved Credit Card

Prepaid Credit Card

Previous Balance

Primary Account Number

Primary Credit Card Holder

Prime Rate

Principal

Prior Credit Card Authorization

Private Label Credit Card

Processing Date

Processor

Purchases

Purchase Credit Card Interest Rate

Purchase Protection

Receipt

Recurring Billing

Reference Number

Refund

Retail Credit Card Merchant

Reversal of Charges

Revolving Line of Credit

Rewards Credit Cards

Schumer Box

Secured Credit Cards

Service Charge

Settlement

Setup Fee

Smart Card

Standard Credit Card APR

Statement

Student Credit Cards

Teaser Rate

Terms and Conditions

Total Available Credit

Total Finance Charge

Transaction

Transaction Fees

Travel Reward Credit Cards

Truth in Lending Act

Two-Cycle Billing

Universal Default

Unsecured Credit Card

User Authentication

Usury

Validation Code

Variable Rate Credit Card

Visa Credit Card

Voided Transaction

Zero Balance

Account Number

The credit card number is a unique number assigned by the credit card company for the credit card holder that is embossed on the credit card to identify the company and the credit card holder.   With a credit card, the account number varies in length depending on the credit card issuer.  Visa credit cards, MasterCard credit cards and Discover credit card account numbers are sixteen numbers in length, while American Express account numbers are fifteen numbers in length.

Address Verification System

An address verification system is a process of authenticating a new credit card through mail or via phone by using the billing address of the credit card holder in the authorization procedure.  This process is used predominantly to reduce credit card fraud.  An address verification system may also be used in mail order, telephone credit card order or credit card online transactions by using the credit card holder’s billing address information in the authorization request.

Adjusted Credit Card Balance

The adjusted credit card balance is the result of calculating the balance by using the process of adding credit card interest charges, credit card fees and purchases to a credit card statement and subtracting any credit card payments or credits.  This is a less common method for calculating monthly credit card interest charges since it favors the credit card holder more than the more common bank credit card preferred method of  the average daily balance calculation.  The balance is determined by subtracting credit card payments or credits received during the current billing period from the credit card balance at the end of the previous billing period.  Credit card purchases for the current billing cycle are not put into the calculation.  This credit card account holders now has until the end of the billing cycle to pay off the balance and avoid paying interest charges on that amount.

Additional Cardholder

An additional credit card holder is an individual assigned to a credit card account who is also issued their own credit card.  For many individuals that obtain a new credit card, it is often convenient and possible to add an additional credit card to the account for use by someone else.  The primary credit card holder remains the responsible party for the credit card debt and making the credit card payments on all charges made and is ultimately responsible the full credit card balance, whether the credit card debt was created by the original cardholder or the additional cardholder.

Affinity Credit Card

An affinity credit cards are issued by credit card companies that brand or identify the credit card with an institution or organization not operated by the card issuer.  The affinity card is offered jointly by the two organizations, the credit card company and the branded institution.  The affinity is the relationship the credit card holders may have with the non issuing institution such as a college or non profit organization.  The affinity organization receives brand loyalty from the credit card services and often a small percentage or fee from the credit card company.  The two organizations generally behind affinity cards are bank credit card issuers and professional associations, special interest groups or other non-bank companies.  Affinity cards, or sometimes referred to as co-branded cards, can often be a loyalty credit card where the non-bank partner receives financial benefits from card use by its members or credit card account holder.

Annual Fee

Some credit card companies charge a credit card fee for yearly membership or participation.  Credit card companies proclaim that these fees help pay for the credit card companies costs of managing the accounts or for some of the credit card services offered on the accounts.  These fees generally range anywhere from $25 to $75, but can be much higher depending on the credit card company.  Bank credit cards with no annual fees are becoming much more common.  Credit card annual fees are usually seen on cards that provide uncommon or exceptional services such as charge cards that require the credit card balances to be paid in full each month or card with particularly high credit card limits or even on some bad credit cards designed for consumers with  a poor credit history.

Annual Percentage Rate

The credit card annual percentage rate or credit card APR is the credit card interest rate charged and expressed as an annual mount.  The APR is essentially a measure of the cost of credit and reflects the total yearly cost of the interest, expressed as a percentage rate.  The credit card rate may be subject to change, based on the terms of the card and whether the credit card rate is fixed or variable.  In addition, different transaction types may be charged different APRs, such as for credit card cash advances or credit card balance transfers which may be charged a higher credit card interest rate or lower depending the credit card offer and the terms set by the particular bank credit card.

Application

A credit card application is the document consumers’ fills out and sign to apply for a credit card in order for a credit card company to process and approve a new credit card.  It typically asks for personal information such as income and social security number to help the card issuer decide whether to extend credit, determine the credit card limit and establish the credit card interest rate.  The parties that fill out and sign the credit card application will be the responsible parties for the credit card debt and credit card payment.  The application can be filled out and signed as a joint account or as an individual.

Application Fee

A credit card application fee is a credit card fee charged by some credit card companies that must be paid by the individual filling out a credit card application before the credit card company will review or process the new credit card.  Credit card application fees are not very uncommon but may apply for credit cards designed for people with bad or no credit, such as secured credit cards, prepaid credit cards and bad credit cards.

Authentication

Authentication in credit card processing, is the process of establishing or confirming that data has come from its original source and is genuine.  This involves the credit card merchant verifying the data received and data sent is provided to appropriate parties.  The process of assures that a credit card transaction has been initiated by an authorized user of the credit card.  Authentication is used to combat credit card fraud in credit card transactions.  Credit card authentication has been expanded by credit card companies by including security codes on credit cards.  Authentication is not the same as authorization.

Authorization

Credit card authorization is a procedure in credit card processing used to assure that a credit card holder has adequate funds available within the credit card limit for a transaction.  This procedure is important for the credit card merchant as well as the credit card holders.  Authorization is the first step in processing a credit card transaction request.  Authorization keeps the transaction within the credit card limit of any particular card and is used to control credit card fraud.  With appropriate authorization for a credit card transaction, the correct funds will be set aside for the transaction with the merchant and the credit card balance of the account holder will increase as well as producing a reduction in the available credit  by the authorized amount.

Authorization Amount

The authorization amount is the dollar amount approved by the credit card company to be charged for a specific credit card transaction.  The authorization is usually an amount equal to the amount of the credit card purchase made by the card holder.  However, with transactions that may require authorization before a purchase is initiated, such as paying for gas at the pump, an authorization amount greater than the expected purchase is processed by the credit card merchant and credit card issuer.  After transactions are approved, the authorized amount is deducted from the amount of available credit from the credit card account holder’s credit card limit.

Authorization Date

The credit card authorization date is the date and time that a transaction was authorized.  In a credit card transaction, the authorization date is the date that the credit card merchant receives authorization from the bank credit card completing the credit card processing on a specific transaction.  With debit card transactions, the authorization date may not always be the same as the date funds are withdrawn from a bank account.

Authorization Only

A credit card authorization only transaction is a transaction initiated by a credit card merchant that sets aside a reserve amount of funds against the credit card limit for a future transaction.  The credit card purchase may take place within moments or not take place for some days.  Authorization only transactions are generally used by merchants that require authorization in advance before a purchase may be completed, such as renting a car or a paying for gas.

Authorized User

An individual who has been granted permission to use a credit card account.  An authorized user is any person who has permission to use a credit card account, but is not responsible for paying the bill.  An authorized credit card user is measurably different from a credit card holder on a joint credit card account, in which both parties are responsible for the credit card payments and credit card debt.  In some cases, an authorized credit card user will receive a credit card in his or her name, even though it is linked to another parties credit card account and they are not obligated with the credit card company to make the credit card payments.

Automatic Payments

Credit card automatic payments are credit card payment that are established and authorized as regular withdrawals to be made from a checking or other deposit account to pay the credit card amount due.  This is a method of making regular predetermined payments on the credit card accounts by transferring funds from the checking or savings account.  The amount can be for the minimum credit card payment up to the full credit card balance.

Available Credit

The available credit on a credit card is the amount of funds or credit available for use.  The amount is determined by subtracting the outstanding credit card balance from the total available credit or credit card limit.  The available credit is essentially the amount of credit you have left to use on your credit card account for future transactions.

Average Daily Balance

The average daily balance is a common way for credit card companies to calculate credit card interest charges for the billing cycle.  This is a measure of the average balance for each day in the billing cycle.  The most common calculation for the average daily balance is to simply all of the daily balances and divides that sum by the number of days in the billing cycle.  The calculation includes new purchases and credit card payments and credits your account from the day payment is received by the credit card company.  Depending on the basics of an individual credit card agreement, new purchases may or may not be added to the credit card balance, credit card cash advances are usually included.  The average daily balance is then multiplied by the card’s monthly periodic credit card rate to calculate the finance charge for the month.  The average daily balance is the most common method used by bank credit cards to calculate the credit card payment due.

Bad Credit

Bad credit is a term used to describe an individual with a poor credit rating or a low credit score or in general less than perfect credit.  Common practices that can bring about a bad credit rating include making late credit card payments, skipping payments, exceeding credit card limits or declaring bankruptcy.  Bad credit can result in an individual being denied future credit or access to a new credit card.  Bad credit cards, secured credit cards and prepaid credit cards are types of credit card offered to assist consumers in obtaining a credit card if they have bad credit.

Bad Credit Cards

Bad credit cards are credit cards offered for individuals that have damaged or poor credit.  This is an informal term use to describe types of credit cards that easier to obtain than standard credit cards.  Bad credit cards include secured credit cards, prepaid credit cards and other credit card offers that require less stringent credit standards.  These credit cards can help consumers rebuild their credit by offering credit that the account holder can then use to make timely credit card payments, access credit for needed transactions and can benefit those borrowers with no credit history as well.  Most unsecured credit cards and secured bad credit card companies report to credit bureaus, thus enabling borrowers to re-establish a good credit profile and credit score.  Many bad credit card offers will have a higher credit card interest rates and potentially higher credit card fees.

Balance

When referring to credit or loans, a balance refers to the amount owed by a debtor on a specific credit account.  The credit card balance is the outstanding amount of money owed on a credit card account.  The credit card balance includes any prior credit card debt carried into a new billing cycle plus new credit card transactions including credit card interest and credit card fees less any credit card payments made.  In banking, the balance may refer to the amount of money in a particular account.

Balance Transfers

Credit card balance transfers are a credit card service established to move an unpaid balance from one open credit card account to another credit card account.  Special credit card fees or a different credit card APR may apply to this type of transaction.  A consumer that has a credit card balance that they don’t expect to pay off in a month may want to use another credit card with a lower interest rate and transfer the balance to the lower credit card rate to save credit card interest charges.

Balance Transfer Fee

The credit card balance transfer fee is a fee usually charged by credit card companies for transferring credit card balances from one credit card to another.  The balance transfer fee is a one-time fee charged for balance transfer services.  However, many credit cards offer special balance transfer promotions with no fees and special low credit card rates for a bank credit card balance transfer.  Some credit card companies do not have a fee and for those that do, the amount of the credit card fee will vary.

Balance Transfer APR

The balance transfer APR is the annual percentage rate of interest charged on a balance transfer transaction by a credit card company.  Many credit card companies charge a separate credit card interest rate on balance transfer transactions.  The credit card balance transfer APR is generally slightly higher than the APR for purchase transactions, but many new credit cards offer special balance transfer credit card rates to encourage cardholders to transfer balances from other cards.  Special rates usually apply for a specified period of time and apply only to balances transferred during the promotion.

Bank Credit Card

A credit card or debit card issued by a bank.  The term bank credit card is often used to describe all credit cards that are not issued by retail stores or other merchant.   The bank credit card may also be a debit card, where money is paid in before a transaction can take place, or it may be a credit card.  Bank credit cards are most frequently associated with the networks of Visa credit cards and MasterCard credit cards.

Billing Cycle

The billing cycle is the length of time between billing statements on a credit card. Generally, the billing cycle is one month in length but the number of days within a specific billing cycle may vary with credit card companies.  It is the total number of days between the last due date and the current due date on a credit card statement.

Billing Statement

The credit card billing statement is a monthly bill or the record prepared by the credit card companies listing all the transactions during a billing cycle.  The statement shows a list of transactions carried out by credit card account holder in a particular billing cycle.  The statement includes the previous cycle credit card balance, new credits or credit card payments, new credit card interest charges, new credit card fees and the ending balance.  The billing statement is usually sent via mail but is more frequently being communicated electronically through the bank credit card website.

Business Credit Card

Business credit cards are utilized by corporate executives as well as small business owners in order to separate keep business expenses from personal charges.  Credit card companies market to small business to supplement the consumer card market.  A business credit card has many of the same features as traditional credit cards, including low introductory credit card rates, credit card cash back, credit card rewards and rebates.  Business credit card interest rates and credit card fees will depend on the credit card company and on an applicant’s credit and can change at any time.

Card Member

The credit card member is the individual to whom the credit card number is issued or the authorized users of that credit card.  Card member is used to refer to that credit card holder as either a member of the network branded on the card such as Visa credit card or MasterCard credit card or may refer to the bank credit card such as Chase or Citi or other credit card company that issued the card.

Card Reader

The credit card reader is a device capable of reading the encoding embedded in credit cards in order to record a transaction by a credit card merchant.  The card reader transmits the credit card online and eliminates the need for the merchant to manually enter the credit card number and other cardholder information during the point of sale.  The credit card reader is sometimes referred to as a credit card terminal.

Cardholder Agreement

The credit card cardholder agreement details the terms and conditions of the credit card account and includes information such as the credit card rate, credit card fees and other credit card services and costs associated with the account.  The agreement is required by Federal Reserve Board regulations and must include the credit card annual percentage rate, monthly minimum credit card payment formula, annual credit card fees and the cardholder’s rights in billing disputes.  Changes can be made to the cardholder agreement, but the cardholder must be notified in advance.

Cash Advance

Credit cards companies offer cash advances as a credit card service to account holders.  The credit card cash advance feature will have a separate credit card limit for cash advances.  The cash advance can be accessed by using the card at a bank or an ATM or with checks provided by the bank credit card.  A credit card fee is normally incurred when obtaining cash advances.  In addition, the credit card interest rate is usually higher than on purchases and typically there is no grace period.

Cash Advance Fee

The credit card cash advance fee is a fee charged by a credit card company whenever a cardholder borrows cash using the credit card.  Cash advances are one of many credit card services that credit card companies often promote so that card holders can get access to cash up to a certain limit.  The cash advance option generally comes with a separate credit card fee.  The fee can be a per-transaction fee or a percentage of the cash advance.  Depending on the bank credit card, the cash advance fee may be deducted directly from the cash advance at the time the money is received or it may be posted to your bill as of the day you received the advance.

Cash Advance APR

The credit card cash advance APR is the credit card interest rate charged just for cash advances on a credit card account.  This cash advance credit card service usually has a much higher credit card interest rate than for purchases and credit card balance transfers.  The higher credit card rate is generally because the credit card companies attribute a higher risk for this type of credit card use.  There is usually no grace period for cash advances, credit card cash advances will incur interest charges as soon as the transaction is posted.  The credit card agreement will disclose the cash advance APR on a new credit card.

Cash Back

Cash back is one of many credit card reward features that come with some credit card offers to encourage credit card use or to invite consumers to apply for a credit card.  This credit card reward program credits the card holder a certain percentage of purchases during a period of time.  This credit card service allows the credit card account holder to earn cash credit card rewards with each purchase.  These types of cards can be the best credit card type for those that pay off their credit card debts monthly and use one credit card for monthly expenses in order to maximize the reward and avoid excessive credit card interest charges.

Charge Back

A charge back is a previously authorized transaction on a credit card that is returned to the credit card merchants account and credited back to the card holder’s credit card balance.  A charge back is the reversal of a credit card transaction due to the cardholder disputing the validity of the transaction or because of dissatisfaction with the product or service received from the merchant.  Typical credit card services disputes involve product delivery problems or product or service dissatisfaction.  A charge back can also occur because of a failure by the credit card merchant to follow the rules established by the credit card company for credit card processing.  Credit card holders are usually instructed to try to obtain a resolution from the merchant before disputing the bill with the credit card company.

Charge Back Period

The charge back period is the time period, usually stated in number of days, from the credit card processing date during which the credit card company and credit card account holder may initiate a charge back or reversal of a credit card transaction.  The charge back period may vary between credit card companies, but the general industry standard is between 30-60 days.  Credit card holders need to review each credit card billing statement to be sure and dispute any incorrect charges on their account within the designated charge back period.  The credit card agreement and / or the credit card application will have the terms regarding charge backs and the charge back time frame.

Charge Card

A charge card is a type of payment card in which the charges to the credit card account must be paid in full each month when the statement is issued.  The term charge card is generally reserved for credit cards that do not operate as a standard revolving line of credit but requires the payment be paid in full by the statement due date each billing cycle.  It is similar to a credit card, except that the contract with the credit card company requires that the cardholder must pay charges made in full, there are no monthly credit card payments or a credit card balance that is carried over.  Typically charge cards do not charge credit card interest charges, but late fees can apply if full payment is not received by the due date.  A credit card is technically a revolving credit line which does not need to be paid off in full, no late fee is charged as long as the minimum credit card payment is made, which can carry a balance forward as a loan charging interest.  Often, the two types of payment cards are referred to without a distinction made them and the two terms are used interchangeably to describe any card which can be used as payment.

Charge Off

A charge off is a term by creditors and credit card companies referring to a debt that they do not expect to be paid in a reasonable time and are classifying it as an uncollected debt for their records.  This does not mean that the debt or credit card balance for credit card holders no longer exists, that the credit card holder is not responsible for the credit card balance or that there will not be further attempts to collect the credit card debt.  The term is simply a classification once the credit card payments or debt payments have reached a point in which the credit account is considered no longer active.

Collection Agency

A firm assigned by a creditor, such as credit card companies, to collect overdue debts.  Some creditors and bank credit cards have internal collection departments others will use and outside service.  Similar to the original creditors, collection agencies often report account information to consumer reporting agencies.

Co-Signer

A co-signer is a person who signs a credit agreement or promissory note that is also signed by one or more other parties.  All parties are taking responsibility for the debt.   A co-signer for a credit card is an individual who signs the credit card application and agreement with another borrower and promises to honor the agreement for timely credit card payments and should the principal borrower default, be responsible for the repayment of the total credit card debt.

Consumer Credit Counseling Service

Consumer credit counseling is a service that provides counseling to individuals on how to work out a realistic budget and debt repayment plan to work with creditors.  The goal is produce a manageable budget and repayment plan to ensure that debts are paid back over time.  Consumer credit counseling services are usually non-profit organizations.  When working with credit card companies, consumer credit counseling services may request a longer pay off period from the bank credit cards or a reduction in the credit card interest rates to reduce the overall credit card payments.  Often the terms are not agreement with the original credit card application and though the credit card debt will be reduced faster the individual’s credit rating may be harmed.

Consumer Credit Protection Act

The Consumer Credit Protection Act, passed in 1968, established basic consumer protections, including Truth in Lending disclosures.  It requires creditors, including credit card companies, to state the cost of borrowing in understandable terms to allow consumers to determine how much credit will cost, and to compare credit card offers and most credit offers.

Credit

Credit is the lending of money.  Money that a lender, such as a bank credit card, gives to a borrower on condition of repayment with a certain interest rate over a period of time.  The parties involved in a credit transaction are the creditor, which would be the credit card companies, and the debtor, which would be the credit card holder or the party receiving the funds with a promise to repay at a later time.  Credit is essentially any form of deferred payment, including deferred payment of debts.  Credit cards in where the borrower pays the credit card balance in full without incurring credit card interest charges would still involve the use of credit.

Credit Card

A credit card is a type of payment card used by consumers to make use of credit in financial transactions.  Credit cards offer revolving lines of credit to the credit card holder, which allows the credit card holder the ability to pay the credit card balances over time or pay the monthly credit card debt at once.  When a new credit card is used to make purchases, the cardholder is accessing an established credit line with a preset credit card limit to pay for the goods or services purchased.  Approved credit card merchants accept the credit card as a form of payment and credit card companies approve credit and issue the cards to consumers who apply for credit cards and meet the card company’s standards.  The amount of credit and the credit card interest rate on the credit card is generally determined by the borrower’s income and credit history.  Credit cards are issued by banks, credit unions and some stores such as department stores and gasoline companies.

Credit Card Consolidation

Credit card consolidation involves combining more than one high credit card balances into one single credit card with a lower credit card interest rate and/or a reduced monthly credit card payments.  Credit card consolidation most frequently takes place with credit card balance transfers from one credit card sometimes using 0% interest credit cards.  Credit card consolidations may also be achieved with a home equity loan or line of credit or even a low interest rate personal loan.

Credit Card Issuer

Financial institutions that provide a line of credit to the consumer through a credit card also called credit card companies.  The credit card issuer or credit card company may include banks, credit unions or savings and loan associations as well as stores such as department stores or gasoline companies.  The card issuer assumes primary responsibility for the cardholder’s ability to repay the credit card balance on the credit card account.  MasterCard credit cards and Visa credit cards are not a credit company.  When the credit cards have these credit card services, the issuing bank credit card company that issues the new credit card to the cardholder is the issuer and will be a licensed member of Visa and MasterCard.

Credit Card Number

A credit card number is a unique number assigned to a credit card account.  The unique number is assigned by the credit card company to each new credit card.  The first six digits on a credit card are called the issuer identification number.  The first credit card numbers identify the issuer such as, Discover, Visa credit card, MasterCard credit card or American Express, for example.  The remaining digits of the credit card number identifies the cardholder or account owner and is unique to each credit line account established with a credit card company.

Credit Card Processor

A company that performs the authorizations and settlements on credit card activities, usually handling several types of credit cards and payment cards.  Merchants who accept credit cards as a form of payment utilize the credit card services of credit card processors who handle the transactions electronically.  For credit card merchants that wish to sell their products to bank credit card holders, they will retain the services of one or more of these processors who handle the credit card processing for the credit cards that the particular merchant wants to accept as payment.

Credit Freeze

A process of suspending or preventing a credit reporting company from releasing your credit report without your consent.  All credit inquiries including those to approve new credit or new credit cards or credit card applications will also be hindered because special approval is needed to access the credit report of the individual who has requested a credit freeze.  The credit freeze can be used to avoid questionable activity, as a form of voluntary restraint from use, or to help stop credit card fraud due to theft or missing credit card numbers.

Credit History

A record of an individuals or a company’s past borrowing and repayment, including information about late credit card payments, other debt payments and public records such as bankruptcies.  A credit history will show whether the bills are paid on time, total available debt and how much is owed to individual companies.  Credit card companies use the information from an individuals credit history for credit card processing and to decide whether to provide customers with credit cards and at what credit card interest rate.  A good credit history is important to obtain the best credit card rates but individuals may apply for a credit card even with less than perfect credit history.

Credit Inquiry

A credit inquiry is created when a financial institution, bank credit card or authorized service pulls or accesses someones credit report.  There is a record created in a credit report of each time the borrower, a lender or a potential lender obtains a copy of the consumer’s credit report.  Credit inquiries, especially multiple inquiries, may negatively impact an individual’s credit score.  If an individual were to apply for a credit card, in order to have the credit card application approved the credit card company will access the applicants credit report and therefore make a credit inquiry.

Credit Life Insurance

A form of insurance offered by financial institution and credit card companies to cover the balance of credit or the credit card debt including the accrued credit card interest in the event of the death of the primary account holder.

Credit Limit

The maximum amount of credit card debt that a credit card company allows on an account.  This is the total that credit card companies will allow a cardholder to borrow on a single card and includes finance charges, credit card cash advances, credit card fees, and purchases.  Credit limit may also be known as a credit line.  Credit card companies generally set the credit limit based on credit history, and will usually increase the credit limit based on a good credit card payment history and good financial behavior.

Credit Line

A type of credit in which a bank or other financial institution provides credit to a customer during a predetermined period that may be accessed and paid down with limited restrictions.  The borrower may either withdraw the credit amount all at once, or make a certain number of withdrawals during the specified period or withdraw more funds once the credit line has an available balance.  Credit cards operate the same principle of a credit line for the credit card holder.

Credit Monitoring

Credit monitoring is one of many credit card services provided by some credit card companies that monitors the activity on the card holders account to search out suspicious or unauthorized use.  There is generally a credit card fee for this service.  This is an ancillary service provided by credit card companies that is often not much better than an individual checking their own credit periodically including the access to free credit reports each individual is entitled to receive per year.

Credit Repair Agency

A credit repair agency is an organization that, for a fee, will help dispute inaccurate or outdated information in an individuals credit history which may be damaging their credit rating and hinder their ability to get a credit card or other credit on favorable terms.  Credit repair agencies concentrate on working with the credit reports and in many cases can help restore the credit rating or credit score fro individuals.

Credit Report

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.  The credit report contains information about an individuals or businesses borrowing habits and money managing skills and contains data that includes the number of credit accounts, how long they have been open, the amount of credit extended, the current credit balance and the payment history.  Information obtained by the credit bureau includes public records and data as well as credit information from firms that provide them data.  The agencies compile the report and release it to lenders and others as permitted by law.  Credit card companies and other lenders use the data to determine whether to approve a loan and to set the terms.  A person with a good credit report is likely to get a better interest rate than someone with a poor credit report.

Credit Reporting Agency

A credit reporting agency is also commonly referred to as a credit bureau.  Credit reporting agencies are companies that receive, maintain, and provide information about consumers’ credit history including credit card histories.  These companies issue credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans.  Three national credit reporting agencies, Equifax, Experian, and TransUnion, control the majority of credit reporting.  There are many smaller agencies, but almost all of them get information from one or more of the three major agencies.

Credit Score

A credit score is a number that is result of a statistical program scoring system used by creditors and credit bureaus that analyzes data in an individuals credit report or credit profile.  The credit score is a numerical estimation of the likelihood that a borrower will meet debt obligations.  The credit score is a result of a credit score system that is used to rate credit applicants according to various characteristics relevant to creditworthiness.  This score is computed based on information in a credit report and helps lenders to make judgments about granting a loan or a credit card.  Negative information on an individual’s credit report can lower their credit score and harm their ability to get a good rate on a credit card, obtain a mortgage loan or even get a new job.

Credit Scoring System

A credit scoring system is a statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.  The information for the credit scoring system comes from credit reporting companies regarding debts, payments and an applicants overall credit profile.  Credit scoring systems are used by creditors to determine if credit applicants are a good risk for credit cards, auto loans and home mortgages.

Current Credit Card Balance

The current credit card balance is the dollar amount that is currently outstanding on a credit card.  The current balance is the current total dollar amount owed by the credit card holder in order to pay off that credit card debt.  The current balance on a credit account is the sum of any prior unpaid credit card balances, plus new charges including credit card purchases, credit card interest due and credit card fees and less any of the credit card payments that have been made.

CVV2

CVV2 is an acronym for credit card verification value 2.  The CVV2 is a 3 digit code printed on the back of a bank credit card used as a security feature to protect credit card online transactions and phone transactions from credit card fraud.  The CVV2 ensures that the credit card number is legitimate and that the credit card is in the possession of the purchaser.

Daily Periodic Rate

The daily periodic rate is the credit card rate used by credit card companies to calculate interest and finance charges on an unpaid credit card balance.  The daily periodic rate is calculated by dividing the credit card APR or Annual Percentage Rate by 365 and rounding the final credit card interest rate to calculate the finance charges.

Debit

A debit is a direct charge to an account.  As this pertains to credit card processing, debit transactions are made by writing a check, using an ATM withdrawal or taking money back from a merchant at the point of sale.

Debit Cards

A payment card that is linked directly to a bank checking or savings account.  Debit cards are similar to a credit card however, bank debit cards do not use credit for financial transactions.  The debit card takes the purchase price from the bank account as soon as the card transaction is posted for a purchase of goods or services.  The debit card may be used at an ATM or to make purchases, withdrawals, or other types of electronic fund transfers.  The purchase amount is deducted directly from your bank or savings account, so there are no interest charges.  Fees for exceeding your balance can be charged.

Debt Consolidation

A debt consolidation combines multiple credit accounts or loans into one new loan or account.  Debt consolidations in credit cards refers to transferring multiple credit card accounts to one credit card or loan.  Usually the process is done to lower the overall credit card rate on the total credit card debt, extend the term of the debt, or to make the credit card balances outstanding more manageable.

Default

Failure to repay a credit card or otherwise meet the terms of a credit agreement.  Default often occurs when the credit card holder fails to make the credit card payments according to the terms of the card holder agreement.  The default may be caused by a late credit card payment, a skipped credit card payment, or paying less than the minimum amount due.  The default action gives the credit card company the ability to increase the credit card interest rate.  Default may also occur when the credit card account holder violates the terms of the agreement with the credit card company in another manner such as exceeding the credit card limit.  Default can occur with any type of debt contract including credit cards, mortgages, bonds or promissory note.

Default Credit Card APR

The default credit card APR is the credit card interest rate charged to credit card holders who default on the terms of their credit card agreement, such as missing the credit card payments or exceeding the credit card limit.  These credit card interest rates can be extremely high, often as high as 29%.  Credit card companies consider default broadly to include something called universal default which occurs when the credit card account holder is delinquent with another credit card company yet still has the credit card rate increased because of this delinquency or default the unrelated credit card.

Due Date

Credit card accounts that have balances will have a due date.  The credit card payment should be collected by the bank credit card company on or before the due date.  If a credit card payment does not arrive by the credit card due date, the credit card will be charged a late fee.  Credit card holders should know the credit card payment due date to avoid extra credit card fees and a possible change in the credit card interest rate due to late payments received after the due date.  Some credit card companies allow their credit card account holders to set their own due dates or change the due date.  The Truth in Lending Act requires the credit card company to have the credit card statement mailed out 14 days prior to the due date or the expiration of a grace period if there is one offered by the credit card company.

Electronic Authorization

Authorization for credit card use obtained through electronic means or electronic communication.  The credit card authorization is a code that a credit card processing bank returns in an electronic message to the merchant’s point of sale equipment that indicates approval of the credit card transaction.  An authorization is obtained and required for every credit card merchant sale.  The code serves as proof of authorization from the bank credit card.

Electronic Fund Transfer Act

The Electronic Fund Transfer Act, also referred to as Regulation E, was enacted in 1978 to set guidelines for the rights and liabilities for consumers and credit providers that use electronic funding.  The Act is designed to protect the consumer and the credit providers such as bank credit cards and credit card companies by providing both with rights and liabilities.  Under the Electronic Fund Transfer Act if an error is found in regards to electronic funding there are specific guidelines and time frames in which the consumer and the credit provider must follow to resolve the issue.  Due to the time limit, consumers should review their bank statements and credit card statements regularly to look for errors and discrepancies with credit card payments or credit card fees and transactions and contact the credit card company immediately.  Prepaid credit cards, such as gift cards, phone cards, and store value cards may not be covered by the Act.

Encryption

Encryption is the process of encoding transactions for secure electronic communication.  Credit  card encryption is used as a process of scrambling data such as the credit card number and account information so that only the intended receiver from the point of sale with the credit card merchant can use it.  Encryption transforms the credit card information using an algorithm that makes it unreadable to except for the use of credit card possessing by the credit card companies to counter credit card fraud and theft.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) was established as a law in 1974,  this law prohibits creditors including credit card companies and bank credit card issuers from discriminating on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance when deciding whether to issue credit.  Failure to comply with the Equal Credit Opportunity Act’s can result in civil liability to the credit card company or financial institution.

Expired Credit Card

A credit card in which the printed or encoded expiration date has been passed.  When a credit card company issues a bank credit card or debit card to a consumer it has an embossed, encoded, or printed 15 or 16 digit account credit card number and a date in which that card will expire and a new credit card must be issued.  Once this expiration date has passed the credit card or debit card is no longer valid, will not go through credit card processing and will not be accepted by the credit card merchant.

Fair Credit Billing Act

Fair Credit Billing Act Passed by Congress in 1975 to help consumers resolve billing disputes with credit card companies and limits consumer liability for unauthorized credit card use or credit card fraud.  The law is designed to provide consumers with protection against unfair billing practices and sets guidelines for correcting mistakes on credit account billing statements including bank credit cards.  The act requires issuers to credit the credit card payments to a consumer’s account the day they are received.  The Act allows credit card holders to dispute any charges they believe to be false within a 60 day period.

Fair Credit Reporting Act

The Fair Credit Reporting Act governs what credit bureaus can report and for how long including bank credit card accounts.  The Fair Credit Reporting Act holds credit reporting agencies responsible for correcting inaccurate information in credit reporting.  Companies such as credit card companies that give information to the credit reporting agencies are required by the Act to provide accurate information.  The Act limits disclosure of consumer credit reports only to entities with specified purpose.  The Act requires credit reporting agencies to provide information contained in their credit report, and verify accuracy of any information disputed by the consumer.  Credit reporting agencies must allow consumers a free copy of their credit report every 12 months, if requested.  Credit reporting agencies must investigate and settle any disputes within 90 days.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act is a federal law that prohibits certain methods of debt collection, such as harassment.  This Act was designed to prohibit debt collectors from unfair, deceptive, or abusive practices when collecting credit card debts and other debts, to support fair debt collection, and provide consumers with a way to have access to and dispute any discrepancies being reported on their credit report.  The Act provides collection guidelines for debt collectors, the rights of consumers who are involved in debt collection, and the penalties for improper collection practices by credit card companies and other debt collectors.

Fees

Fees include any charges assessed by the credit card company.  Normal fees may include a bank credit card annual fee.  Extra charges or fees on a monthly credit card statement may be there if the credit card account holder utilized some of the special credit card services available, such as a credit card cash advance or a credit card balance transfers.  Fees may also be incurred due to late credit card payments or when the credit card transaction amounts total over the credit card limit.

Finance Charge

The cost of the credit card credit or consumer credit expressed as a dollar amount.  The finance charge for using the credit card, including the credit card interest and other credit card fees such as credit card cash advance fees, credit card balance transfer fees or credit card debt fees in the actual amount not the rate.  This is the total dollar amount credit will cost.

Fixed Rates

A credit card interest rates determined by the credit card offer and credit card agreement in which the credit card rate will typically not change over a given period of time.  Credit card interest rates that are fixed rate have the advantage of providing the credit card account holder the knowledge of knowing what the interest rate will be.  However, a new credit card that offers a fixed rate is not a guarantee that the interest rate on your credit card will always be a low fixed rate.  The credit card interest rate is only fixed for as long as a credit card company wants to leave it at a particular rate.  The Federal Truth in Lending Act requires that the credit card companies provide the account holder with fifteen days notice before they can change the fixed rate.  The credit card agreement or credit card application will outline the terms of the credit card apr and potential rate change.

Float

The float on credit card transactions refers to the time when a credit card holder makes a purchase or obtains a credit card cash advance and the time the transactions may take to post to the credit card account.  The credit card transaction amount is not added to the credit card balance on the account until the transaction does post.  The time between a credit card purchase or transaction and posting is referred to as the float.  As the speed of electronic communication has rapidly increased, the float is almost a term of the past as more transactions are posted via credit cards online and post almost immediately.

Floor Credit Card Rate

An interest rate floor is often set by credit card companies for credit card interest rates that are based on a variable or adjustable rate.  The floor credit card rate is the minimum rate that the credit card APR will be reduced to should interest rates drop. Usually variable rate credit cards are based on the prime rate plus a margin.  If the prime rate drops, the credit card interest rate will drop.  The floor rate places a limit as to how low the rate charged can fall.  If rates drop dramatically bank credit cards issued with a floor rate will not drop below a predetermined level that should be codified in the credit card application and credit card agreement.

Foreign Credit Card Transaction Fees

A foreign credit card transaction fee is a credit card fee that is charged for purchases that are made in a foreign currency.  Foreign transaction fees are charged by most credit card companies on purchases made in a foreign currency or that may involve a foreign bank.  Usually, the credit card fee is a percentage of the amount of the foreign currency purchase amount.   The credit card companies may classify this fee  as a foreign exchange fee.  Foreign transaction fees are charged by the company doing the credit  card processing such as Visa or MasterCard.  The Visa credit card or MasterCard charges the bank credit card companies and that fee is subsequently charged to the credit card account holder.

Fraudulent Transaction

A fraudulent transaction is any credit card transaction that was not authorized by the bank credit card holder and is a form of credit card fraud.  The fraudulent transaction can be any transaction or credit card information processed using another parties credit card that is not authorized by the person on the credit card account.  Credit card transactions that are considered as fraudulent may include stolen credit cards, fraudulent credit card processing, theft of the credit card number and account information, counterfeit cards and credit cards used that were lost or not received.

Fraudulent User

A fraudulent credit card user is any individual who engages in credit card fraud by using another individuals credit or credit card without the consent or prior authorization of the credit card holder.  The fraudulent user may get access to the credit card or credit card number by mail or phone order or a recurring transaction and subsequently purchase goods or services without the credit card holder’s consent.

Full Credit Card Payment

A full credit card payment generally refers to the credit card payment that pays off the total credit card balance.  A full credit card payment means you have repaid your total credit card debt in the credit card.  Full payment can be important for credit cards that have a grace period since there is usually no additional finance charges or credit card interest applied to the account if the credit card balance is not carried into the next billing cycle.

Gift Card

A gift card is a card of that has a stored financial value that can either be redeemable at predetermined merchant locations or used like standard bank credit cards but with a preset amount of money to spend.  The difference with gift cards, either store gift cards of gift credit cards is that they are preloaded with a set value.  The merchant gift cards are predominantly designed to increase store sales and do not have any fees.  The credit card gift cards usually carry fees.  These credit cards are issued by banks or credit card processors such as Visa or MasterCard.

Grace Period

A period of time, usually 25 days long, during which you can pay off your credit card charges with no credit card interest charges assessed for the purchases made.  This is the credit card interest free period of time that credit card companies established between the transaction date for a purchase and the billing date and applies if there is no credit card balance carried over from the previous billing cycle.  Credit card holders who carry a balance on their bank credit cards do not receive a grace period and finance charges begin the date a purchase is made with the credit card.  Not all credit cards offers will have a grace period, which means that credit card interest is charged on purchases from the day they are made and recorded.  The grace period does not usually apply to credit card cash advances or credit card balance transfers.

Identity Theft

Identity theft occurs when someone uses your name, Social Security number, credit card number, or other personal information without your knowledge for their own benefit.  They may use this information to make unauthorized credit card purchases or open new credit card accounts in your name.  Identity theft is growing problem for credit card companies and consumers and is vigorously prosecuted by state and federal law enforcement agencies.

Interest Charges

The interest charges are the cost for borrowed money that is generally expresses as a percentage of the amount borrowed.  Interest charges are based on a percentage of your remaining credit card balance.  The credit card interest rate is the price a borrower pays for the use of money on a credit card account; this credit card rate is used along with the present credit card debt outstanding to determine the amount of interest charges during a credit card billing cycle.  Credit card interest rates are normally expressed as a percentage over the period of one year, the credit card interest charges refers to the actual dollar amount of interest billed on the credit card not the credit card rate.

Interest Rate

An interest rate is the price a borrower pays for the use of money he does not own, and also refers to the rate of return a lender receives for loaning funds to a borrower.  The credit card interest rate is the rate at which a credit card company charges a customer for borrowing money for credit card purchases, credit card cash advances, credit card balance transfers and other related transactions.  Credit card interest rates are normally expressed as a percentage over a period of one year.  It is disclosed as the credit card APR on the credit card application and agreement on the credit card offers.  The credit card interest rate may vary from one bank credit card to another.

Introductory Period

The time period during in which an introductory credit card offer applies.  The introductory period usually refers to the temporary time period for credit card services such as a lower introductory credit card rate for balance transfers or credit card cash advances or new credit card charges.  The introductory period refers to the time period during which offers take place and will subsequently expire.  The offers during the introductory time period will vary greatly between bank credit cards.  The offers, the period covered and conditions will be explained on the new credit card agreement or credit card application.

Introductory Rate

An introductory credit card rate is a temporary, lower credit card interest rate or credit card annual percentage rate (APR) offered by some credit card companies.  The introductory credit card rate is sometimes referred to as a teaser rate, used to attract customers to apply for a new credit card, or to switch bank credit card companies.  The introductory credit card interest rate usually applies for a temporary period of time, 6-12 months, before converting to a normal long-term fixed or variable rate interest rate.  This type of rate may apply only to credit card purchases, sometimes only to certain purchases or only to credit card balance transfers, or in some cases both.  The introductory rate may change abruptly if certain conditions are not met such as timely credit card payments.  Special restrictions will typically apply and vary from one credit card offer to another.  The credit card application and terms of agreement describe the credit card interest rate, the introductory interest rate and what conditions may apply for the introductory rate.

Issuer

Issuer refers to credit card company or financial institution that provides the actual credit, usually in the form of a bank credit card, to a consumer.  Institutions that issue new credit cards to card holders can include banks, credit unions or savings and loan associations, and retailers such as department stores or gasoline companies.  The financial institution issues the new credit card and bills the customer for purchases made against the credit card number and account.  Credit card services providers such as Visa and MasterCard are not issuers of the cards.

Joint Credit Card Account

A credit card account that is equally shared by two or more individuals where both individuals assume legal responsibility to repay the debt.  The individuals involved all share the associated rights and liabilities of the credit card account and are regarded by law as co-owners of the account.  Joint credit and joint accounts are usually based on both individual’s combined assets, incomes and credit report and both parties are responsible for the credit card payments and the credit card balance should default occur. This means that if anything happens to the account, such as defaults, overdrafts and credit card fraud, all parties are affected.  A joint credit card account is different from having an authorized user on an account, an arrangement in which case only one person is responsible for the credit card debt and credit card payments.  Often couples that fill out a joint credit application and get a new credit card as a joint account may qualify for a higher credit card limit.

Joint Liability

The responsibility of two or more people to repay a debt.  Joint liability gives legal responsibility to repay the credit card debt and make timely credit card payments to both parties on the credit card application or credit card agreement regardless of which party authorized the charges or incurred the credit card debt.  Joint liability for credit cards occurs on joint accounts not on accounts where one party is only an authorized credit card user.

Late Payment

Credit card statements make a record of the date on when the last credit card payment was made and when the next credit card payment is due.  A credit card payment made later than the date agreed upon in the credit card agreement and on the credit card statement is considered a late payment.  If the payment arrives after that credit card due date, the credit card account is considered past due and you may be charged a credit card late fee.  Late payments may be reflected on an individual’s credit report.  Late payments may be harmful to your credit profile if they run past 30 days delinquent.  The late credit card payment may also trigger default credit card interest rates that raise your credit card apr significantly.  Even if you make timely payments to all other bank credit cards, your credit card rates can be raised to the default rate if it is reported that you are late with a payment to another credit card.  If you have paid late numerous times, it may be difficult to get additional credit or even a new credit card.

Late Payment Fee

Late credit card payment fees are charged when a credit card holder is overdue in making a monthly payment on their credit card.  A late payment fee is charged to a borrower who misses paying at least their minimum payment by the payment due date specified on the credit card agreement and on the credit card statement.  The credit card late payment fee can be a flat fee or a percentage of the amount of the credit card payment due.  Late payments may be reflected on your credit report.  Late payments may affect your credit history negatively, even if your entire outstanding credit card balance is later paid in on time.  In additions, late payments may also trigger the default penalty credit card rate which can raise a credit card apr as high as 29%.

Liability

Liability in credit refers to the responsibility for a loan or credit account repayment.  Credit card liability is the legal responsibility to repay the credit card debt and make timely credit card payments.  When a credit card application is filled out, the new credit card account states that the account holder agrees to be liable for any charges to his or her account, including purchases, fees and credit card interest charges and finance charges.  The bank credit card liability is described in the credit card agreement.

LIBOR Rate

LIBOR stands for London Interbank Offered Rate.  This is an interest rate which is a index or average of bank rates based on the interest rates established by banks that borrow unsecured funds from one another in the London wholesale market.  LIBOR is similar to the Fed Funds Rate or even the Prime Rate used in the United States.  Credit card companies may use LIBOR to calculate variable rate credit card rates and establish the credit card interest rate and credit card APR.

Loyalty Programs

Loyalty programs are used by many credit card companies to maintain or draw in new credit card customers by giving the credit card account holder incentives to use specific credit card services.  Loyalty programs are generally categorized as separate from credit card reward programs since the usually are specific branded credit cards.  These credit cards are still often referred to as rewards credit cards, point’s cards, discount cards or member cards.  As an example, some airlines offer loyalty credit cards that grant their users discounts on their airline flights if they incur a specific dollar amount of credit card transactions, the discounts are good only on that airline.

Magnetic Stripe

A stripe of magnetic information affixed to the back of a plastic credit card or debit card.  The magnetic material is applied as a strip in the surface of a bank credit card used to encode cardholder information to facilitate credit card processing.  It contains customer and account information such as account credit card number and credit card holder name required to complete electronic financial transactions.  The physical and magnetic characteristics of this stripe are specified in the International Organization for Standardization standards for credit card services.

Margin

The margin is fixed number added to an interest rate, normally an adjustable rate, to establish a final rate.  Often expressed as percentage points, the amount that a credit card company adds to an index such as the prime rate to arrive at the final credit card interest rate.  As an example, if the credit card rate is based on an index that is now at 5 percent and the margin is 4.75 percent, the final credit card interest rate used to calculate the monthly rate and the monthly credit card payment will be 9.75 percent.

MasterCard Credit Card

A bank credit card that utilizes the MasterCard brand name.  The credit card will bear the MasterCard symbol, enabling a MasterCard credit card holder to obtain goods, services, or cash from a MasterCard merchant or an acquirer.  MasterCard partners with financial institutions and credit card companies that issue credit cards, and with merchants who accept those cards.  MasterCard offers a network of more than 28 million acceptance locations around the world and, in many cases, guarantees payment through its system of credit card services.  Through its merchant agreements, it sets payment and charge-back policies that affect consumers.  It does not, however, issue cards, set annual fees, determine credit card APRs  or solicit new credit card merchants to accept cards.

MasterCard Credit Card Issuer

A bank or financial institution that issues MasterCard credit cards and is a member of the MasterCard network.  A MasterCard issuer is a financial institution that issues MasterCard cards.  The bank or other financial institution that extends credit to a credit card holder through bank credit card accounts with the MasterCard agreement.  The financial institution issues a credit card and bills the card holder for purchases against the bank credit card account.

Merchant

In general terms this is the location or store where credit card purchases are made. More specifically, the merchant is a retailer, service provider or any other entity, pursuant to the credit card merchant agreement, that agrees to accept bank credit cards, debit cards, or both, when properly presented.  A merchant is the entity that contracts with merchant banks or independent service organization to originate credit card transactions.

Merchant Credit Card Agreement

The written agreement between a credit card merchant and the credit card processor or credit card company.  A merchant agreement is the written agreement between a merchant and a bank that contains their respective rights, duties and warranties, with respect to acceptance of the bank credit cards and matters related to the bank credit card activity.

Merchant ID

An identification number provided to a credit card merchant from the credit card processor to identify credit card transactions during credit card processing also referred to as the merchant number.

Minimum Finance Charge

If your account is subject to a finance charge, a minimum finance charge may apply.  A minimum finance charge is the smallest charge the issuer will charge on outstanding balances even if the formula to determine the normal monthly finance charge would not be that high.  A credit card holder will be charged a minimum finance charge if the calculated amount of the finance charge is less than the minimum finance charge set by the credit card company for the billing cycle.  For example, a finance charge may be calculated to be only $0.25 for a particular billing cycle, but if the credit card company’s minimum finance charge is $0.50, the charge will be $0.50.  A minimum finance charge applies only when the credit card agreement states there will be a finance charge, usually when the credit card has a balance from one billing cycle to the next.  This is not the same as the minimum monthly credit card payment.

Minimum Monthly Credit Card Payment

The minimum monthly credit card payment is the lowest amount of money that is required to be paid on a credit card account each month.  For credit card holders that carry a balance on their credit card, there will be a minimum amount due each month, which will be on the statement.  When an applicant fills out the credit card application, the credit card agreement indicates that the card holder will agree to pay a minimum credit card payment each month.  The minimum monthly credit card payment will be the amount a cardholder can pay to keep the credit card account from being delinquent.  The minimum monthly amount is based on the percentage of the outstanding credit card balance or a minimum fixed dollar amount.  Each credit card company can calculate this amount independently, but it is usually between 3-5% of the outstanding credit card debt.

Monthly Periodic Credit Card Rate

The monthly periodic credit card rate is part of a formula used by credit card companies for computing a consumer’s total credit card balance.  It is the interest rate factor used to determine the credit card interest charges on a monthly basis. The factor equals the yearly credit card rate or credit card APR divided by 12.  The monthly periodic rate is multiplied by the amount of a credit card holder’s outstanding credit card balances to come up with the interest rate charge for the billing cycle.

National Credit Card Issuers

The majority of credit cards in the U.S. come from a small quantity of national credit card issuers, such as Chase, Bank of America and Citi.  They often originate from credit card friendly states such as Delaware and South Dakota that do not impose limits on what credit card companies can charge for annual credit card interest rates.  National issuers will generally be the banks that issue bank credit cards to all 50 states.  They are different than regional issuers that supply credit cards on a regional, state or on a smaller scale.

New Credit Card Balance

New credit card balance is the credit card debt outstanding at the end of a billing cycle.  The new credit card balance is the balance owed after the unpaid credit card balance from the previous billing cycle is added with new purchases, credit card interest charges and other fees added together or the beginning balance less the credit card payments made plus all new charges are totaled.  The ending total dollar amount is called the new balance.

No Pre-Set Spending Limit

No pre-set spending limit rewards consumers who have established a good credit history.  The credit card limit is not predetermined; there is no credit card debt ceiling.  Instead the credit card limit is set by the credit card company, based on credit card payment history, spending patterns and other personal variables.  No credit limits are more common on charge cards that are paid in full monthly.

Online Banking

Online banking systems allow customers access to host of banking services from a personal computer by connecting with the bank’s computers over the Internet. Online banking can be used to pay monthly credit card payments on credit card accounts as well as a host of other options.  Also known as Internet banking.

Online Bill Payment

A service offered by most all banks now, sometimes with a small monthly fee but often free of charge, that relieves consumers from having to write checks and lick stamps to pay their monthly bills.  Online bill payment systems allows consumers to enter the names of their creditors and the numbers of their accounts including credit cards and pay virtually all recurring monthly bills.  Online bill payment also allows the credit card acount holder to pay the credit card online, either the monthly credit card payment or the full credit card balance.  Most all credit card companies allow credit card online access and bill payment.

Opt Out Request

For consumers who don’t want the credit card companies selling their private information and cut back on the amount telemarketing sales and credit card offers through the mail, they can write to each credit bureau separately and request that personal information not be shared.  By federal law the company must comply with your request immediately.  You can write any of these major reporting bureaus and they will contact the other major bureaus with your request:
Experian Consumer Opt Out, 701 Experian Parkway, Allen, Texas, 75013
Equifax Inc. Options, P.O. Box 740123, Atlanta, Georgia, 30374-0123
Trans Union Marketing List Opt Out, P.O. Box 97328, Jackson, MS 39288-7328

Outstanding Balance

Though this term may often be used by consumers to refer to the amount owed on  a credit card at anytime or the credit card debt, it is used by credit card companies to refer the total amount of money owed to a financial institution or credit card after a payment is made and new charges are calculated.  For example, if a credit card holder has a $400 balance on their credit card and pay $100 when they receive the credit card statement, the remaining credit card balance is $300 plus fees.  This is the balance used to calculate credit card payments and on which the credit card interest is charged.

Over the Limit

A credit card over the limit refers to a credit card holder’s account that has surpassed its credit card limit with a transaction.  Over the limit is when the credit card user has accessed a greater amount of money than what is available on the credit limit or credit line based on the existing outstanding credit card balance at the end of the last billing cycle plus pending transactions.  Any combination of purchases, credit card cash advances, fees or credit card interest charges may cause an account holder to exceed their credit limit.  Depending on the credit card company, the user will be charged an over the limit fee each month until the credit card debt owed is less than or equal to the credit card limit.  When a credit card holder attempts to make purchases that will put them over the limit, the credit card company may decline the transactions or, as has become more common in recent years, may accept the transaction and charge the credit card account the over the limit fees.

Over the Limit Fee

The fee imposed by the credit card company if the credit card balance exceeds the amount of money that was available on the credit card debt limit.  If a credit card  holder exceeds the credit card limit, they will find that they are subject to a fee even if the credit card company authorized the charge that put the credit card debt over the credit card limit.

Overdraft

An overdraft occurs when withdrawals from a bank account, whether by check or debit card, exceed the available balance giving the account a negative balance.  Withdrawing more money from a checking or savings account than what is available, will result in a fee and/or the transaction being declined.  Credit card companies will charge an extra fee for reversing a posted credit card payments if it is the result of an overdraft or overdrawn account.

Payment Cards

A payment card is typically a card that is backed by an account that holds funds for the cardholder or makes credit available to the cardholder.  Payment cards are classified into diffeent types depending on how the card account operates.  The most familiar types of payment cards are credit cards, charge cards and debit cards.  A charge card is a means of obtaining a very short term credit for a purchase.  It is similar to a credit card, except that the card charges made must be paid in full each month.  The credit cards allow the consumers to use a revolving balance to borrow for purhases and services and make monthly paymnets with interest.  The debit card is similar to an electronic check since the funds are withdrawn directly from a bank account.  A gift card or stored value card means the funds are physically stored on the card for use on purchases and services.  These financial products allow consumers to make purchases online, over the phone or in person and at approved merchants.

Payment Due Date

The date the credit card payment must reach the credit card company to avoid a late payment or stay within the contractual agreement established when applying and receiving the credit card.  The payment due date is the monthly date when at least a minimum payment is due to be paid on a credit card account.  With most credit cards the payment due date will fall on the same date each month but can be changed at a later date at the account holders request.

Payment Options

Every month a credit card holder is required to pay money towards a portion of the outstanding credit card balance which is considered your monthly payment.  With many credit cards, the credit card account holder has a choice between paying some or all of the total credit card debt.  A full payment is when the card holder repays the total balance.  In this situation there is usually no additional finance charges applied to the account.  Payment cards such as charge cards do not offer extended credit terms and require full payment each month.  A partial payment allows the credit card holder to make a minimum payment based on a percentage of the outstanding credit card debt and the credit card interest rate.  Revolving the debt in this manner will add interest charges on the remaining credit card balance amount.  The credit card account holder should always pay at least the minimum credit card payment due by the due date to avoid late payment charges.  Paying more than the minimum due will also shorten the amount of time it takes to pay off the credit card balance.

Pending Charges

Pending charges are new credit card transactions that have been authorized but have not yet posted to the credit card account.  These transactions will be subtracted from the amount of available credit but will not have been added to the total credit card debt outstanding.

Periodic Rate

The credit card interest rate on the credit card relative to a specific amount of time.  A periodic rate such as the monthly periodic rate, for example, is the credit card interest rate on a monthly measure of the cost of credit per month.   The daily periodic rate is the credit card interest rate calculated per day or the cost of credit per day.

Personal Identification Number (PIN)

A personal identification number or PIN is a series of numbers used to verify the identity of the authorized user or credit card holder.  Personal identification numbers should be kept secret for the customers use to access their accounts.  Personal codes, usually numbers individuals choose for access to their card that enables them to access money or perform banking transactions through the ATM as well as make purchases without signing a sales receipt at merchants that have PIN pads.  A credit card PIN should not be shared with other individuals or businesses.

Point of Sale

The point of sale is the location where the credit card transaction takes place.  The location for the point of sale can be at any established credit card merchant where the sale and transaction for either goods or services is carried out such as a retail store.  The credit card is read magnetically, and the credit card holder’s signature is obtained as insurance against the accuracy of the credit card transaction.  Point of sale transactions are the most secure form of credit card commerce.

Point of Sale Terminal

This is the electronic terminal where the credit card encoded data is read.  The point of sale terminals can transmit information via a regular telephone line, broadband Internet connection, or wireless signal.  A credit card processor is an organization that collects credit authentication requests from merchants with the point of sale terminal and provides the merchants with a payment guarantee.  When the acquirer company gets the credit card authentication request, it checks the transaction for validity and the record on the credit card for:  credit card merchant’s ID, a valid credit card number, the credit card expiration date and the credit card limit.  Once the credit card information is verified, the credit card transaction can take place.

Posting

The updating of an individual credit card balance to reflect changes due to transactions.  The credit card transaction that changes the credit card balance may be due to merchandise sales, instant cash, credit card cash advances, adjustments, credit card payments, credit card interest charges and any other charges or credits.  The date of the credit card purchase, cash advance, fee, service charge or payment is recorded on the credit card statement.  The posting date is the date that the credit or charge is recorded on the account.

Pre-approved Credit Card

An applicant with a pre-approved credit card offer means that a potential customer has passed a preliminary credit screening.  A pre-approved credit card or pre-approved credit card application is one that has cleared the first round of credit information screening or approval without further information being supplied by the credit card applicant.  This does not guarantee the delivery of a new credit card and the credit card company can still turn the applicant down if the credit rating is unsatisfactory or other determinants of approval are not met.  If the credit card offer changes due to less than satisfactory information received after the pre-approval is sent, the applicant may be offered a less favorable credit card apr or significantly lower credit card debt limit.  Pre-approved credit cards are usually offered as the result of the credit card company obtaining lists from the major credit reporting agencies of people who meet certain credit and demographic criteria.  The individuals on these lists are then solicited to obtain a new credit card.

Prepaid Credit Card

A prepaid credit card is a form of secured credit card that is based on a previously deposited cash balance.  Purchases made with prepaid credit cards are checked for approval against existing funds or the current credit card balance that is available.  Prepaid credit card are basically a stored value credit card, they usually carry the major association logos such as Visa or MasterCard and can be utilized in the same manner as other bank credit cards.

Previous Balance

The previous credit card balance is the amount owed to the credit card company at the end of the last billing period.  This amount does not include pending credit card payments, credits and new purchases made during the current billing period.  The previous balance is also one of the three main ways that the credit card companies calculate finance charges.  The credit card company takes the previous month’s statement and multiplies it by the credit card interest rate to arrive at the figure that represents the monthly finance charge.  This method of calculating monthly interest is more advantageous to the credit card company since it allows the credit card company to charge interest the credit card balances that the card holder has not yet reduced the balance on with their current payments.

Primary Account Number

The credit card number that is encoded or embossed on the credit card that identifies the credit card company that issued the credit card, the bank credit card type, and the individual credit card account holder’s account.

Primary Credit Card Holder

The primary credit card holder is the individual listed on an account who has responsibility for the credit card transactions, the credit card payments and the outstanding credit card debt.  The primary credit card holder may share financial responsibility for the credit card payment and the credit card balance with a secondary credit card holder.  An added authorized user is not necessarily responsible for the credit card payments and the accumulated credit card debt.

Prime Rate

The prime rate is merely a lending base rate used to make loans to certain borrowers.  It is not necessarily the lowest or best rate at which loans are made.  The prime rate is well publicized and fundamental rate established to base interest rates on certain loan types including credit card rates.  The prime rate is established by private banks and can vary between banks.  Credit card interest rates are often based on the prime rate plus a certain percentage to cover its risk associated with this type of consumer lending and add a profit margin.  Credit card rates based on the prime rate will vary between credit card companies due to the difference in the margin added to the prime rate to determine the credit card rate.

Principal

Principal refers to the amount of money owed, excluding interest.  Credit card principal is the amount of money borrowed or credit card debt on the credit card without the fees and interest.  Unlike credit card interest or credit card fees, the principal reflects the actual dollar amount of the purchases made or the credit card balance that remains on the credit card account before credit card interest charges and fees.

Prior Credit Card Authorization

Credit card authorization that is granted prior to the transaction actually taking place with an approved credit card merchant.  The approved authorization request with the credit card and credit card number may be held for an extended length of time before a credit card is present or not.

Private Label Credit Card

Private label credit cards are cards branded for a specific retailer, independent merchant or manufacturer.  A private label credit card may be issued by a retail outlet, such as a department store or gasoline retailer, and usually contains the logo of that retailer.  It is accepted only by the retailer who issued it.  Retailers partner with a bank or a credit card processing company to back the cards.  If the retailer does not manage the private label card, a third-party issues the credit cards and collects the credit card payments from cardholders.  Retailers prefer to have their own credit card because it offers customers another way to shop with them, further market their brand and increase sales.  The card may be a credit card, debit card or stored value cards that can be used only within a specific merchant’s store.

Processing Date

The credit card processing date is the day in which the credit card transaction is processed by the issuing financial institution or the bank credit card.  If a separate credit card processor is used it is the date when the acquiring bank processes the credit card transaction.

Processor

A credit card processor is the company that routes an authorization request from a point of sale device to Visa or MasterCard, and then arranges for the fund settlement to the merchant.  Credit card processing is usually accessed via direct dial out lines, the internet or wireless connecting systems from the point of sale.  Credit card processing needs to have a sponsoring bank in order to gain access to the Visa credit card and MasterCard networks.  It has become more common for the processor to be the bank credit card company and the bank processes the transaction once a credit card number is entered.  While many banks are also their own processors, other banks will use a third party processor to handle the credit card processing for them.

Purchases

Credit card charges that a credit card user makes by purchasing services and products from an approved credit card merchant.  The term purchases is used to differentiate other charges on a credit card statement such as the credit card interest charges, credit card payments, credit card fees, and others.

Purchase Credit Card Interest Rate

A purchase credit card interest rate is the interest rate charged on regular purchases authorized on a credit card.  This is the credit card interest rate established by the credit card company for purchase transactions only.  The credit card rate may be different from a credit card cash advance rate or a credit card balance transfer rate.

Purchase Protection

Credit card protection or purchase protection is a benefit that is offered with some credit cards that entitles the credit card account holder to be reimbursed if stolen, lost or damaged products are purchased with the credit card.  Usually credit card companies that offer credit card services such as purchase protection have a higher annual fee than most standard credit cards or higher credit card interest rates.  The actual terms and restrictions of coverage for purchase protection insurance will vary from one credit card company to another.  Most credit card protection services will cover purchases made using the credit card against theft, loss, or accidental damage that occurs within a certain period of time only.  Credit card protection service is often referred to as an enhancement product within the credit card industry.  The problem is the coverage is often of little value relative to the added costs such as credit card fees or higher credit card interest rates.

This coverage should not to be confused with credit card loss protection programs. Credit cards already have loss protection built in.  If a credit card holder didn’t authorize a charge, they should not pay it.  When an unauthorized purchase occurs, follow the credit card company procedures for disputing charges you haven’t authorized.  According to the Federal Trade Commission, the liability for unauthorized credit card charges is limited to $50.

Receipt

A physical copy or document that provides a record of a credit card transaction that took place at the point of sale.  The receipt usually contains a description of the transaction, which includes the date, the credit card merchant name and location, the amount, the reference number and a portion of the primary credit card number.  Since 2007, federal law has required that account numbers on credit cards and debit card receipts must be truncated or not show more than the last five digits of the card number, and not show the credit card’s expiration date.

Recurring Billing

Transactions for which an authorized credit card user grants permission to a merchant to periodically charge their account for a recurring purchase of goods or services.  Recurring billing will result in a credit card purchase on the credit card holder’s monthly statement during each cycle.  The credit card company will continue to process the purchase each month until instructed by the credit card merchant that the billing has ended.

Reference Number

A number assigned to each monetary transaction in a credit card services billing system during the credit card processing.  This number is assigned to each transaction in the billing system used by the credit card merchant, the credit card holders billing statement and the credit card processor.  Each reference number is printed on the monthly statement to aid in retrieval of the billing document, should it be questioned by the credit card holder or credit card company.

Refund

A credit to a credit card holder’s account.  The creation of the credit to a cardholders account may be the result of a reversal from returned merchandise or credit card payment error, credit card billing error or even credit card fraud.  This credit card refund is an amount that is returned to the credit card holder by the credit card company should there be any agreed to error on the credit card statement.

Retail Credit Card Merchant

A merchant identified by the credit card industry that sells goods or services in the retail industry that is not transacted via mail, phone or Internet.  A merchant that accepts credit cards and provides goods and or services in the retail industry, but that is not a mail or phone merchant may be further classified as the type of retail merchant they are such as travel and entertainment, food and clothing, general merchandise, etc…

Reversal of Charges

A financial transaction that cancels or negates an earlier transaction that has been processed.  A credit card reversal is when a previous charge has been removed from the credit card account balance.  A reversal on a credit card charge may include the refund for merchandised purchased or the reversal of a credit card late payment fee or even the reversal of charges due to credit card fraud.

Revolving Line of Credit

A revolving line of credit is an agreement to lend a specific amount of funds to a borrower and to allow that amount to be borrowed repeatedly once it has been repaid below the total amount made available.  A line of credit does not have a specified repayment schedule or fixed monthly payment but may require a minimum payment to cover the interest charges and contribute to paying off the principal.  Most credit cards are considered to have a revolving line of credit.  The credit card can be used repeatedly as long as the total credit card debt does not surpass the credit card credit limit.  The credit card will have a minimum monthly payment that covers credit card interest charges and at least some principal.  The maximum line of credit or credit card limit can be reduced or increased by the credit card company.

Rewards Credit Cards

A credit card service in which the credit card companies offers an incentive or reward for its use.  A credit card reward program allows the account holder to accumulate reward points based on purchases or transactions made with the credit card.  Many different credit card reward plans have been created to meet demand and encourage use.  The  points or rewards earned with the credit card can be redeemed for products or services in the particular program that the credit card is enrolled in.  Credit card rewards typically involve credit card cash back or points that can be redeemed for merchandise, services or that can be transferred to frequent traveler programs of hotels or the frequent flier programs for various airlines.  Reward plans can vary dramatically from credit card to credit card.

Schumer Box

The Schumer Box is named for the then-chairman of the Senate Banking Committee, Sen. Charles Schumer, that passed landmark consumer protection legislation.  The regulation came into effect in 2000 and requires all credit card companies to present the borrower with key facts and figures about the credit card lending agreement in a clear and conspicuous manner, set out in a table or box.  This standardized disclosure box features consistent terms and conditions for credit card offers, which allows consumers to compare credit cards in a consistent way.  Specific terms and conditions such as purchase, credit card balance transfer and credit card cash advance interest rates, annual fees and credit card interest rate calculation methods are required to be spelled out for consumers in conjunction with all new credit card account solicitations.

Secured Credit Cards

Secured cards are a type of credit card that requires collateral or a security deposit in order to be able to establish a credit card debt limit.  Typically, the line of credit will be equal to the amount deposited with the bank or financial institution that issues the credit card.  In some cases the credit line will represent anywhere from 50-100% of the security deposit.  The credit card account holder’s savings deposit or bank account guarantees payment of the outstanding credit card balance if the card holder defaults on payments.  The deposit for the secured credit card must remain in the account until the credit line is closed or the credit card company decides the security is no longer necessary.  Secured credit cards are used by people trying to rebuild their poor credit or by beginners establishing their credit.  A secured credit card used by people trying to rebuild their poor credit or by beginners establishing their credit.  Many secured credit cards have credit card application and credit card processing fees.

Service Charge

Service charge is a wide-ranging term that encompasses a variety of charges for credit card services provided by a credit card company.  This can be a  charge or fee imposed by a credit card issuer to provide a service related to an individuals credit card account.  Service charges on credit cards may include a fee for conducting a credit card payment as a check by phone or to receive  a copy of credit card statement.

Settlement

The transactions or financial transfers between merchants, credit card issuers, and credit card processors.  The process of sending a merchant’s transactions to the network for credit card processing and merchant payment.  For non-bank credit cards, the credit card company pays the merchant directly, less any applicable fees, and then bills the credit card account holder.  For bank credit cards, the acquirer pays the merchant, less any applicable fees, with funds from Visa or MasterCard.  The bank credit card issuer then bills the credit card account holder for the amount of the sale.  For credit card transactions, settlement occurs at the completion of transaction processing between the involved financial institutions and processing entities, and funds for the credit card transaction have been successfully deposited into the merchant’s bank account.

Setup Fee

A credit card setup fee is a one time fee charged by a credit card company when a new credit card account is opened.  Most credit cards do not require credit card setup fees.  Credit cards for people with bad credit are generally the only types that have a setup fee.  Secured credit cards and prepaid credit cards commonly have setup fees.  Standard credit cards, for people with good to excellent credit histories, almost never charge a setup fee.

Smart Card

A credit card that is implanted with a memory element.  The microprocessor in the credit card can store information.  The card stores information on a microprocessor or memory chip rather than the magnetic stripe found on ATM and other credit cards.  The credit card may be used to hold financial data or records or simply have embedded identification information.  These cards are generally able to be reloaded with new data.  With this ability, credit card companies can store credit card reward program information, security information, or the card can be used as a stored-value card.  The smart card can keep track of the card balance remaining if it is designed as a stored value card.

Standard Credit Card APR

The standard APR is the credit card interest rate after any introductory period ends and before increases due to specific transactions or penalty periods.  This APR will come into effect after the introductory period expires if there is one.  A credit card may then have several different credit card interest rates and APRs.  These rates and APR’s are applicable to different types of credit card transactions such as credit card purchases, credit card cash advances and credit card balance transfers.

Statement

A detailed record of credit card transactions.  A statement from a credit card company describes and summarizes the current period credit card activity that occurred on the cardholders account.  This record will include all activity such as: the prior period outstanding credit card balance, current period purchases, credit card payments made during the billing cycle, credits, and finance charges for the month or billing period.

Student Credit Cards

Student credit card are specifically designed for young adults in school.  These credit cards are often more lenient with regards to young adults who have limited credit histories.  Credit card companies that isuue these credit cards generally approve the cards with a lower credit card limit on them and often, a higher credit card interest rate.  They are helpful for students who are just starting out and do not have much credit history.  Student credit cards can be beneficial for establishing a credit history.

Teaser Rate

A credit card teaser rate is also referred to as an introductory credit card interest rate.  This is a below-market interest rate usually offered for a short period of time on credit cards.  This is generally a temporary lower credit card interest rate to encourage customers to switch credit cards or accept a new credit card offer.  After the credit card teaser rate is over, the credit card interest rate increases to the indexed rate or the standard credit card interest rate offered by that credit card company.  The credit card teaser rate usually lasts from a few months to up to one year before the credit card interest rate increases.

Terms and Conditions

Terms and conditions is the common name for the credit card document in which credit card companies describe in detail the credit card agreement and the credit card company practices.  This will be the rules and regulations being agreed to when the credit card applicant becomes a new credit card holder.  After a consumer fills out the credit card application and receives the new credit card in the mail, the first use of the credit card transforms these terms and conditions into a legal contract with the credit card company.

Total Available Credit

The amount of unused and available credit that is offered by a bank or credit card company to an individual or entity having credit extended to them.  The available credit is the amount that is available to be charged to a credit card account.  The credit card total available credit will be determined by the difference between the credit card debt limit and the current outstanding charges on the credit card account.  The total available credit will change based on the credit card balance and changes in the credit card debt limit that the credit card company may alter from time to time based on predominantly on the credit card payments and credit card history.

Total Finance Charge

The sum of all monthly finance charges that the credit card holder is paying for credit card borrowing.  This may include the monthly finance charge on existing credit card balances, credit card cash advance finance charges, as well as any other charges that may apply for credit activity on the account.

Transaction

A specific financial activity that is submitted to a credit card processor.  The transaction is action between a merchant and a credit card holder that results in activity on the card holders account.  An example of a transaction is the process or activity the takes place when a credit card holder makes a purchase with their credit card.  A transaction date will indicate when the actual goods or services were purchased.  Some credit card companies use a transaction identifier to identify each approved transaction.

Transaction Fees

Fees that are assessed on a specific credit card transactions or acts of doing business.  An example of a transaction fee would be when a credit card holder is assessed an additional fee for using their credit card for a cash advance.  Transaction fees may also be assessed for other special credit card services performed in almost any specific business transaction.  Common credit card transaction fees are late fees, a fee for exceeding the credit card debt limit, fees for credit card balance transfers and credit card cash advance fees.  Usually the terms and conditions of transaction fees are outlined in the credit card offer or the credit disclosure statement.

Travel Reward Credit Cards

A program that allows the credit cardholder to accumulate reward points for travel related benefits based on purchases or transactions made with the credit card.  This is one of the many reward programs offered with some credit cards.  Credit card offers for travel reward programs include offering airline miles, hotel stays, and other travel rewards.  Travel credit card rewards awards the credit cardholder miles or points for every purchase, which can later be used to put towards the cost of a trip or vacation. Bank credit cards may charge annual fees to participate in rewards program and credit card interest rates will vary. 

Truth in Lending Act

Federal law that protects consumers by requiring lenders to publish specific information so borrowers can compare cost and terms of credit offered by lenders. The Truth in Lending Act (TILA) is the primary federal law governing the extension of consumer credit by lenders in the United States.  Congress instituted the Truth in Lending Act in 1968 to ensure more accurate disclosure of credit terms so that consumers could compare the various credit terms available in the credit marketplace.  This act is intended to help consumers protect themselves and help evaluate credit terms including credit card offers and credit card billing.  The Truth in Lending Act requires lenders and credit card companies to disclose finance charges in dollars and as an annual percentage rate (apr); the length of the grace period, if any; annual fees; minimum credit card payments required; and the company providing the credit line and the credit card limit.

Two-Cycle Billing

Two-cycle billing or a two cycle credit card balance billing is the balance computation method used by some credit card companies that allows them to apply interest charges to two full cycles of credit card balances, rather than the most recent billing cycle’s or billing statement balance.  Two-cycle billing essentially eliminates the grace period for people who carry a balance in the previous month.  The credit card interest on a balance is retroactive to when the purchases were posted to the account.  Two-cycle billing in credit cards had been so heavily criticized that federal regulators have banned the practice, beginning in July 2010.  This may also be called double-cycle billing.

Universal Default

A provision allowing a credit card company to change the terms of a credit card from the original terms to the default terms when it is informed that its borrower has defaulted with another lender or credit card company.  Universal default is a common practice among credit card companies that allows them to increase the credit card interest rates for any change in risk profile with any lender.  Under universal default, credit cardholders who fail to make timely credit card payments or payments to other creditors, such as other car lenders or mortgage lenders, can have their credit card interest rates raised by their credit card company.

Unsecured Credit Card

Unsecured credit cards are cards that are not secured by collateral.  Customers qualify for these credit cards based on their credit history, their financial profile and their income.  The opposite type of card is a secured credit card.  Unsecured cards are the majority of credit cards that are issued.  As the credit card agreement is the only guarantee, credit card companies require more information regarding income and credit history than with a secured loan or secured credit card.  Unsecured debt in general, is debt that is not backed by the promise of any collateral.  To compensate for this additional risk of having no secure collateral, credit card companies charge higher interest rates than other forms of lending such as a home mortgage or car loan.

User Authentication

User Authentication is the process of verifying or validating that a user representing himself or herself in a transaction is a valid account user.  The user authentication process involves verifying the user’s identity and cardholder’s information against the records of the credit card company.  User authentication is used as a fraud prevention tool for credit card merchants and credit card companies.  User authentication is part of a credit card merchant’s duties in accepting the credit card, although in recent years, authentication has become often superficial or hurried.

Usury

Usury is the lending of money at illegal or exorbitant interest rates.  Usury rates are generally set by state law that would often cap lending rates including credit card rates.  The concept of usury for credit card interest rates has largely been made irrelevant by federal law.  Federal laws allow credit card issuers to export their rates based on what the usury laws are in the states in which they are based.  That means that the state law that applies to the credit card interest rate is exported from the home state of the credit card company not the laws and interest rates caps that may be set in the state of the credit cardholder.  Most major credit card companies have located their headquarters in states with no usury laws, and therefore there is no cap on most credit card interest rates.

Validation Code

When a credit card transaction is processed a code is given that is used to validate and verify the financial transaction.  The validation code is a unique set of characters value that credit card companies include as part of each authorization response to ensure that key authorization fields are preserved in the clearing or settlement record.

Variable Rate Credit Card

A variable rate credit card is a credit card with an interest rate that is subject to adjustment.  The credit card APR may change from time to time based on changes in other interest rates. The credit card interest rate is usually tied to another interest rate, such as the prime rate or the Treasury bill rate.  The actual credit card rates are usually higher than the prime rate or index the credit card interest rate is based on.  The difference between the prime rate or index rate and the actual rate of a given credit card is called a margin.  Often, the variable rate quoted to consumers for credit cards are several points higher than the rate it is based upon such as prime plus five percent or the prime rate plus a margin of 5%.  When the prime rate is raised by 0.50%, the interest rate of a variable rate card subsequently rises by 0.50%.  Look for information on the credit card application and in the credit card agreement to see how often the credit card’s APR may change on a variable rate credit card.

Visa Credit Card

A credit card that carries the Visa symbol and is used by merchants and individuals for financial transactions within the Visa approved network.  Visa cards are products of Visa USA.  Credit cards with the Visa brand are marketed and distributed by bank credit cards and other financial institutions throughout the world.  Visa Inc. operates the world’s largest retail electronic payments network and is one of the more recognized global financial services brands.  Visa facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities with credit cards, debit cards and prepaid credit cards.

Voided Transaction

Voiding a credit card transaction removes the transaction from the batch of transactions that are to be settled.  Voiding the transaction means to cancel out a transaction that has been previously recorded for settlement, but has not yet settled.  The transaction is deleted with the accompanying financial information before settlement of the transaction is recorded.  A credit card transaction may be voided for a variety of reasons, and the credit cardholder should not have the voided transaction amount added to their credit card balance.

Zero Balance

A zero balance is when there is no debt on a credit card.  The zero balance is when the credit card billing statement indicates there is no outstanding balance and no new credit card charges added during the billing cycle.  A zero balance occurs when cardholder pays their credit card account balance in full and has no new activity on their credit card account after their credit card payment is received and processed by the credit card company.



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