Credit Card Terminology
It seems that each segment of the financial world has its own special glossary of terms, and the world of credit cards is certainly no exception. This article provides a handy glossary to the sometimes baffling terms used by banks and credit card companies.
Account setup fee – This is the fee that some banks charge to set up the account. These fees are more common with prepaid credit cards.
Annual fee – Some credit cards charge an annual fee for their cards. This annual fee is generally payable at the same time every year.
Application – The application is the form you fill out when applying for the credit card. This form can be either a paper form or, in the case of an internet application, an electronic form.
Approval - An approval indicates that the bank has said yes to your application.
Balance transfer – This means taking the balance on the current card and transferring it to another credit card, presumably one with a lower interest rate or more favorable payment terms.
Business cards – These credit cards are used to make purchases of a business nature.
Cash back – Some credit cards provide cash back to cardholders, based on the amount of purchases made on the card.
Consolidation – Consolidation refers to taking all the debts owed and combining them into one payment, generally through taking out a lower interest rate loan.
Credit bureau – The credit bureau, also called a credit reporting agency, keeps the credit history of each cardholder on file.
Credit history – The credit history is the background regarding loans, credit cards, mortgages, etc., held by the cardholder.
Debt – This refers to the total amount of money owed.
Gold card – A gold card is a premium card which is offered to those with the best credit ratings, and it generally has a higher credit limit than the standard card.
Grace period – The grace period is the time between the closing date of the account and the time the payment is due. It is important to know how long the grace period is in order to avoid late payments.
Introductory interest rate – The introductory rate is in effect for a limited period of time. Many credit cards come with low or even no interest introductory rates. After the introductory rate period has expired, the interest rate typically reverts to standard levels.
Payments – This refers to the amount paid on the card each month.
Platinum card – Like a gold card, a platinum card typically comes with a higher credit line, and it may come with other perks, such as travel insurance, as well.
Prepaid credit card – With a prepaid credit card, you pay up front, and the money charged on the card is deducted from the balance.
Provider – The bank or company that provides the credit card.
Rewards – These are the perks given by the credit card, and can include airline miles, cash back awards, gift certificates or other items.
Student cards – These are credit cards designed for students. These cards often have less stringent credit history requirements than standard cards.
Terms and conditions – The fine print in the credit card agreement. When you sign your credit card application you are agreeing to the terms and conditions spelled out in the fine print.
Unauthorized use – Unauthorized use occurs when the card has been used without the permission of the cardholder. Any unauthorized use should be immediately reported to the card provider.