Glossary of Credit Card Terms

Below is a list of credit card and credit industry terms which can assist with reading credit card statements as well as the fine print on credit related documents.

Bad Credit
A term used to describe an individual's credit worthiness. Typically, an individual with a credit score of less than 620 would be considered a higher than normal credit risk and therefore, possessing bad credit.
Balance
A balance is the remaining amount owed after all payments or credits to a given financial institution for charges on the account.
Balance Chasing
A method used by some banks to lower available credit to account holders in an effort to curb spending and force them to pay down outstanding balances.
Balance Transfer
The movement of a credit card balance from one credit card to another credit card.
Balance Transfer Fee
The fee charged by a credit card issuer for transferring one balance from a credit card to another credit card. Typically a percentage of the total balance amount and is assessed each transfer.
Balance-to-limit Ratio
This ratio calculates the amount of outstanding credit available to an individual or business against the amount of credit used or current outstanding balances. The lower the ratio, typically, the lower of a credit risk.
Bank
A financial institution that is in the business of providing credit and other financial services.
Bank Holding Company
A company or firm which holds a majority control in one or more US banking entities. Each credit card issuer has a parent bank holding company which oversees their operations. Bank holding companies are supervised by the Federal Reserve Board.
Basis Point
One hundredth of one percentage point. If an interest rate increases by 2.0%, this equates to 200 basis points.
Billing Cycle
The length of time between statement dates.
Billing Statement
An official notice or statement which outlines all transactions, payments, interest charged and fees for a given individual or business account. This is sent by mail or e-mail depending the account holder's preference. Also referred to as a Periodic Statement.
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