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.
- Adjusted Balance
- The issuer calculates a balance by subtracting payments or credits received during the current billing period from the balance at the end of the previous billing period.
- Affinity Card
- A co-marketed credit card that typically offers some type of incentive like rewards for cardholder loyalty. Both the issuer and brand associated with the card benifit financially from card use.
- Annual Fee
- The amount charged or fee for use of a credit card product for a calendar year.
- Annual Percentage Rate (APR)
- Acronym for: Annual Percentage Rate. This is the interest rate that a customer is charged on any outstanding balance over a given calendar year.
- A form used for filling out personal credit information when applying for new credit. An application to a credit card issuer and subsequent approval is based on credit worthiness.
- Application Fee
- A fee associated with processing a credit card application. These are highly uncommon and should raise red flags with applicants who are requested to pay one.
- Approval Response
- This is the response period of time for a merchant when approving a transaction.
- Acronym for annual percentage rate.
- Authorized Amount
- Within credit card transactions, this is the approved amount to be charged for a transaction and is deducted from the available open amount of credit.
- Authorized User
- This is someone who is connected with a credit card account and can charge freely. However, an authorized user is not the main account holder and isn't responsible for payment of charges incurred on the account.
- A program with a bank or credit card provider that automatically takes money from an account. This is also referred to as "autodebit", and it is mostly used to pay recurring bills every month.
- Available Credit
- This is the amount of credit or money available for charge to an individual card account holder.
- Average Daily Balance
- A formula used by credit card issuers to determine the amount of interest charged over a given period of time (e.g. Month).
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