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Glossary
of Credit Card Terms
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for a Credit Card for Bad Credit - Click Here.
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Annual
Fee - A fee charged by the card issuer for being a
card holder. This type of fee is most commonly associated
with frequent flyer credit cards or cards designed to help
you rebuild your credit.
Annual Percentage Rate (APR) - The yearly
percentage rate of the finance charge. The annual
percentage rate will be a fixed or variable rate. See
"Fixed Rate" or "Variable Rate" for
descriptions.
Average Daily Balance - The average account balance
for a billing cycle. Your finance charge will be based on
this balance. You can figure out your average daily
balance by adding the balances of each day of the cycle
together and then divide them by the number of days in the
cycle.
Balance Transfer - The act of transferring the
whole or partial balance of one credit card to another
credit card. This is usually done if the balance is being
transferred to a card with a lower annual percentage rate.
Balance Transfer Fee - A fee that may be charged to
cardholders for transferring a balance from one card to
another.
Billing Cycle - The days between the last statement
and the current statement. Billing cycles generally range
from 20 to 32 days.
Cash Advance - Obtaining cash from the card instead
of using it to make a purchase. The Grace Period does not
apply to cash advances. See "Grace Period" for
more information.
Cash Advance Fee - A fee charged for using your
card to obtain cash. The fee will be a percentage of the
transaction or a flat fee. Higher interest rates generally
apply to cash advances.
Charge Card - Different from a credit card as they
generally have an annual fee and require the balance to be
paid monthly.
Classic Card - The Visa version of a basic credit
card. Generally has a lower credit limit. The Mastercard
version is a Standard Card.
Debit Card - A card issued by the cardholder's bank
that may be used to make purchases or get cash from ATMs.
Each purchase will deduct money from the cardholder's
checking account and works much like a check.
Fair Credit Billing Act - An Act passed by Congress
in 1975 to help cardholders resolve billing problems with
issuers. The Act gave cardholder certain rights when
dealing with credit card issuers. Click to View the Fair
Credit Billing Act. **link that to the Fair Credit Billing
Act Page**
Finance Charge - The amount of interest charged to
an account for the billing cycle.
Fixed Rate - A fixed annual percentage rate of the
finance charge.
Gold Card - A credit card issued by issuers that
may include added benefits not offered with a Classic or
Standard credit card. The credit line is generally between
$2,000 and $5,000.
Grace Period - The time allowed to pay your balance
without being charged a finance charge. Usually 25 to 30
days.
Interest Rate - The yearly percentage rate of the
finance charge. The interest rate will be a fixed or
variable rate. See "Fixed Rate" or
"Variable Rate" for descriptions. The Interest
Rate is also known as the Annual Percentage Rate (APR).
Introductory Rate - A low interest rate offered for
a limited time, usually for the first 3 to 6 months on
being a cardholder. Commonly known as a "Teaser
Rate" for persuading cardholders to apply.
Late Payment Fee - A fee charged to a cardholder's
account once a payment is overdue.
Mastercard - An institution that licenses it's
brand to member banks for use on credit cards and other
products.
Minimum Monthly Payment - The minimum amount of the
balance a cardholder is required to pay to keep the
account in good standing.
Over Credit Limit Fee - A fee charged if your
balance exceeds your credit limit.
Periodic Rate - The interest rate of a specified
period of time, usually referred to as a monthly periodic
rate or daily periodic rate.
Pre-Approved - A person who has passed the
preliminary screening for the credit card. The person will
still need to have their credit checked.
Platinum Card - Usually offered to people with
higher incomes and a good credit history. This card has a
minimum credit limit of $5,000 and may include member
benefits.
Prime Rate - The lending rate set by the Federal
Reserve to banks. Currently 9.5%
Rebate Card - Allows a cardholder to earn points or
money to get cash, merchandise, or services for using the
card.
Secured Card - A card that is secured by a savings
account opened with the issuer. The card is designed for
people who are looking to rebuild their credit, but are
having trouble getting an unsecured card. See
"Unsecured Card" for details.
Standard Card - The Mastercard version of a basic
credit card. Generally has a lower credit limit. The Visa
version is a Classic Card.
Titanium Card - Usually offered to people with
higher incomes and a good credit history. This card has a
credit limit above the Platinum level and may include
member benefits.
Unsecured Card - A credit card that is not secured
by collateral. Unsecured cards are the majority of cards
issued.
Variable Rate - A rate that can increase or
decrease with the changes of the Prime Rate or London
Interbank Offer Rate (LIBOR).
Visa - An institution that licenses it's brand to
member banks for use on credit cards and other products.
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