Terminology

January 14, 2021

Annual Percentage Rate (APR)

Annual Percentage Rate (APR) is the interest rate charged on credit card balances expressed in a standardized, annualized way. This rate is applied each month that an outstanding balance is present. The Annual Percentage Rate is a measure of the cost of credit, expressed as a yearly rate. The higher the APR, the more that you will pay.

Bottom Line:

The bottom line is your monthly income less your monthly expenses.

Balance Transfer:

Balance Transfers allow you to be able to transfer a balance from one credit card to another, usually to take advantage of a lower interest rate. Transfers are limited to the available credit on the receiving card.

Dispute:

A dispute if you think your bill is wrong, write to your credit card issuer at the address listed on your statement, within 60 days of receiving the first statement where the error appeared. The credit card issuer must acknowledge your letter within 30 days, and correct the error or explain why they think the statement was correct within two Billing Cycles, but no later than 90 days after the receipt of your letter.

Grace Period On Purchases:

Grace Period On Purchases means that if you pay your balance on your statement by the due date each month. If you don't, you may not get a Grace Period on Purchases until you pay the balance by the due date for two months in a row.

Secured Card:

A Secured Card is a credit card that is collateralized, or partially collateralized, by a cash deposit held in a special savings account or certificate of deposit. The credit line on the card may sometimes equal to the amount of the deposit.

Variable Interest Rate:

Variable Interest Rate is an interest rate that changes based on an economic index.

Prime Rate:

A prime rate is the interest rate that some major banks charge to many of their best corporate borrowers. Each bank sets its own Prime Rate, though because the rate is so competitive, sometimes the rate is the same at all banks.

Revolving Credit:

Revolving Credit is a credit agreement that allows consumers to pay all or part of the outstanding balance on a line of credit or credit card. As the balance is paid off, it becomes available again to use for another purchase or Cash Advance.

Annual Fee:

Annual Fees are charged by a credit card company each year for use of a credit card. This is a separate fee from interest rate on purchases.

Charge Back:

Charge Back is the number of days, from the transaction’s processing date or endorsement date, during which the issuer may initiate a charge-back.

Credit Line:

A credit line is the amount of money that can be charged to a credit card account. The size of a credit line, and how much of it has been borrowed, have a large influence on consumer credit scores.

Credit Score:

A credit score is a three digit number that summarizes how well a person or business has handled debt. The higher the number, the better. Those with high scores can qualify for larger loans at better rates. Those with low scores will get poor terms, or be turned down.

Credit Report:

A credit report is a compilation of the credit history of an individual or business. It is compiled by one or more of the credit bureaus and contains the detailed history of borrowing, payment behavior and credit inquiries. Credit reports are viewed by lenders in deciding whether to extend credit and on what terms. Credit reports are distilled using complex formulas, into three-digit numbers called credit scores.

Finance Charge:

A finance charge is the total cost of borrowing, including interest and fees, expressed in a dollar amount.

Over-The-Limit Fee:

An over-the-limit fee is a fee charged when your balance goes over your credit limit (also known as over the limit fee). When cardholders attempt to make purchases that will put them over limit, card issuers used to routinely decline the transactions. Without the consumer’s consent, they cannot charge over-limit fees. The act also forbids issuers from charging a fee higher than the amount a consumer is over the limit.