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.

Universal Default
Universal default makes it possible for credit card issuers to raise interest rates for a change in the a lenders profile. For example, if a credit card holder does not make his or her payments on time then a credit card issuer has the option to raise the interest rate.
Unsecured Credit Cards
An unsecured credit card does not require a security deposit to place a limit on the card. It is also not secured by collateral meaning it is not connected to the customers property making it impossible for the lender to seize it. The lender must come up with other means of receiving payment if a customer defaults on his or her payment.
User Authentication
User authentication is the process by which a system verifies the identity of an individual attempting to access it. It verifies the credit card holders identity.
Utilization Ratio
The utilization ratio is important in determining ones credit score. It will compare the amount of credit an individual is using with how much is available to the customer. It is better for an individual to have a low utilization ratio because that means that there is lower debt obligation and more available credit.
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