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.

Card Issuer
Any financial entity that issues credit cards to card holders.
Card Member
Also referred to as an account holder. This individual or business entity is authorized to use a credit card.
Card Member Agreement
The card member agreement is a binding agreement which outlines the terms and conditions of a card holder's account. Federal law requires financial institutions to disclose all related financial formulas for using a credit card as well as resolution practices.
Cash Advance
Cash advances from a credit card are considered a direct loan. Different rates and fees apply versus a card holder's regular APR. These tend to have very high interest rates and can result in significant interest amounts very quickly.
Cash Advance Check
A check which is used to receive a cash loan against the available credit on a credit card. Sometimes these are referred to as convenience checks.
Cash Advance Fee
A fee associated with requesting cash from the available credit of a credit card. Typically, these cost $50 to $75 and aren't connected with a percentage amount fee.
Cash Advance Rate
The interest rate charged on the cash received from a cash advance on a credit card. Typically, these rates are double the purchase or balance transfer interest rate.
Cash Card
Cash cards contain funds already placed in an account which is not tied to an individual banking account and can be withdrawn from ATMs. They can also be used to make purchases at retailers.
Charge Back
A charge back is a returned transaction from the receiving bank back to the merchant. Charge backs are typically related to purchase disputes in which a bank customer doesn't recognize a charge or is disputing it with a merchant.
Charge Card
A charge card requires that the full outstanding balance be paid after each billing cycle. Contrary to credit cards, charge card balances cannot be paid over time.
Charge Off
The value of noncollectable credit card balances which are applied to a bank's loss reserves. Most credit card companies seek collection of past due accounts for up to 6 months.
Charge Off Rate
The percentage of total outstanding credit card balances which have been deemed as noncollectable by the issuing firm.
Chip and Pin Cards
A smart card which uses computer chips to collect and submit information versus the industry standard magnetic strip.
Closed Loop
A gift or credit card which can only be used in a select or grouping of specific locations.
Co Signer
An additional person who agrees to be liable for any outstanding loan if it cannot be serviced by the main signer on the account.
Co-Branded Card
A dual marketed credit card by a bank and consumer brand. Examples include airline mile credit cards or department store credit cards.
Concierge Service
An extra customer service benefit intended to assist with hospitality services such as travel arrangements, dinner reservations and tickets to a local show.
Consumer Credit File
A consolidated report which contains an individual’s existing credit accounts, payment history and whether or not they have filed for bankruptcy or have existing liens against them. Consumer Credit Report Referred to by the Federal Reserve as a G.19 report. A credit report is the common term used to describe the official credit history of an individual with a valid social security number. Credit Reports are updated monthly by credit bureaus such as TransUnion, Experian and Equifax.
Convenience Checks
Checks which can be drawn against an individual’s available credit line. Convenience checks are typically considered cash advances and hold higher interest rates than standard credit card rates.
Credit Bureau
A company which collects credit information to be accessed by companies to assist lenders with gauging an individual’s credit risk.
Credit Bureau Risk Score
A score assigned to an individual’s credit history to evaluate their credit worthiness versus the rest of the population.
Credit Card
A form of payment accepted by merchants during the point of sale to process payment for goods and / or services. Credit card holders may have the option to pay merchant balances over time.
Credit Card Act 2009
Credit Card Accountability, Responsibility and Disclosure Act of 2009 Also known as the Credit CARD Act of 2009, this act instated a requirement on existing credit card owners to give advanced notice on important changes on credit card terms at least 45 days in advance which gives consumers 21 days for paying bills. The law was signed in May 2009, but took until February 22, 2010 to be fully instated.
Credit Card Number
A series of digits that connects the owner with his/her card. The first six numbers relate the card to the issuer identification number (Visa, American Express, etc) The left over numbers are original to each card. The digits are imprinted onto the cards for machines that take imprints of cards instead of swiping them.
Credit Counselor
The purpose of a credit counselor is to help customers escape debt by encouraging a debt management plan organized by creditors. Consumers are recommended to stay with credit counselors who are associated with nationally recognized agencies by financial experts.
Credit Freeze
A credit freeze is an option consumers have to lock their credit making it impossible to open new accounts. It is commonly used when identity theft has occurred or is thought to have occurred. Fees are usually incurred for credit freezes unless proof of identity theft is available. There is also a charge when a consumer decides to reactivate the account or “thaw” the account.
Credit History
Credit History is a record of an individual’s past borrowing and repaying of money. It is managed by three main credit bureaus: Experian, TransUnion, and Equifax. The information is brought together to create a credit report. The report is used by credit card companies in deciding whether or not to issue an individual with credit and how much. The Fair Credit Reporting Act is responsible for keeping the information on consumer’s credit reports.
Credit Inquiry
Credit inquiry begins when a consumer is applying for a loan of some sort. A particular lender can research the credit history of the potential client by checking his/her credit report. Every time there is a credit inquiry it is documented and multiple inquiries can report negatively on the individual’s credit scores. For more information see soft inquiry and hard inquiry.
Credit Life Insurance
A policy designed to insure the balance of the primary cardholder is repaid in the case of death. This insurance can be purchased upon being issued credit by the primary cardholder.
Credit Limit
The credit limit is the maximum amount of money that can be spent on a credit card. The credit limit on a card can be negatively or positively influenced by the credit scores. Minimum borrowing on credit leads to a higher credit score.
Credit Line
A credit line is how much money can be put onto a credit account. The credit line is largely influenced by the consumers credit score. A good credit report leads to a higher credit line.
Credit Monitoring Service
A credit monitoring service is one that watches the activity of the credit card holder. If unnatural or out of character charges occur, the service notifies the card holder. This service is usually billed to the consumer monthly or annually.
Credit Obligation
A credit obligation is a legally binding contract that a consumer signs upon borrowing money that says the loan will be paid back. An example of a credit obligation is an installment loan such as a loan for a car.
Credit Rating
Credit rating is a calculation of the past behavior of a borrower. It is a combination of income, employment, and history of repayment and is a way for a potential loaner to have an idea of the likelihood of repayment.
Credit Report
A credit report is a collection of information on the history of a credit holder. It is a combination of credit inquiries, borrowing history, and the payment behavior of the individual. They are derived from complicated formulas that are used by possible lenders in determining the credit worthiness of a possible client.
Credit Reporting Agency
There are three main agencies, Experian, Equifax, and TransUnion and they are responsible for organizing and reporting information about an individual. They use the payment behavior to create a credit report.
Credit Score
A credit score is a numerical combination of three numbers that are compiled from formulas using a person’s credit history and how timely they paid off their debt. The lower the number the more likely an individual is to be turned down for a loan. The higher the score the more likely an individual or a business is to receive better rates on a loan. FICO is known for its use of credit scores and its formula for credit score is the most often used.
Credit Union
A credit union is a group of people that can compile their assets and provide credit cards to an individual or business. The group of people usually has a bond by concentration, location or employment.
Credit Utilization Ratio
Credit utilization ratio is a comparison of an individual’s credit card balance and the credit limits. The lower the ratio the better, meaning that there is little debt but a good deal of credit is helpful for a credit score.
Currency Conversion Fee
A currency conversion fee is also known as a foreign transaction fee. It a charge on a credit card when it is used in a foreign country in a foreign bank.
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