Credit Card Glossary

Annual Percentage Rate (APR)
The yearly interest rate is charged on unpaid balances, including purchases, balance transfers, or cash advances.
Introductory APR
A promotional interest rate, often 0%, is offered on purchases or balance transfers for a limited time.
Purchase APR
The interest rate is applied to unpaid balances on standard purchases after the grace period.
Balance Transfer APR
The interest rate charged on balances moved from another credit card.
Cash Advance APR
A higher interest rate is applied to cash advances, often with no grace period.
Penalty APR
A significantly higher APR is imposed for violating card terms, such as missing a payment.
Prime Rate
Banks use a baseline interest rate, which influences variable APRs.
Variable APR
An APR that fluctuates based on an index, typically the prime rate.
Fixed APR
An interest rate that doesn’t change based on market fluctuations, though the issuer can still adjust it.
Grace Period
The time between the end of the billing cycle and the due date when no interest accrues if the balance is paid in full.
Credit Limit
The maximum amount that can be charged on a card at any given time.
Available Credit
The unused portion of your credit limit is still available for spending.
Overlimit Fee
A fee is charged for exceeding your credit limit (less common after the CARD Act of 2009).
Credit Utilization Ratio
The percentage of your total available credit that is currently being used is an important factor in credit scoring.
Statement Balance
The total amount owed at the end of a billing cycle.
Current Balance
The amount owed at the moment includes new transactions since the last statement.
Minimum Payment
The smallest amount required to keep your account in good standing is typically a percentage of your balance or a flat fee.
Payment Due Date
The date by which at least the minimum payment must be made to avoid late fees and penalties.
Billing Cycle
The time period between two consecutive credit card statements is usually about 30 days.
Late Payment Fee
A fee is charged when a payment is not made by the due date.
Returned Payment Fee
A fee is charged if a payment is returned due to insufficient funds or other reasons.
Cash Advance
Borrowing cash against your credit card limit, often with high fees and no grace period.
Cash Advance Fee
A fee is charged for taking a cash advance, usually a percentage of the amount borrowed.
Balance Transfer Fee
A fee is charged for transferring balances, typically 3%-5% of the transferred amount.
Annual Fee
Some credit cards charge a yearly fee, often associated with premium rewards or features.
Foreign Transaction Fee
A fee is charged for transactions made in foreign currencies or processed outside the U.S.
Authorized User
A secondary user added to your account can use the card but is not legally responsible for repayment.
Co-Signer
A person who guarantees repayment of the credit card debt if the primary cardholder defaults.
Secured Credit Card
A card requiring a refundable deposit is often used to build or rebuild credit.
Unsecured Credit Card
A standard credit card that does not require a deposit and is based on creditworthiness.
Credit Card Issuer
The financial institution (e.g., bank or credit union) that provides and manages your credit card account.
Payment Network
The company that processes transactions (e.g., Visa, Mastercard, American Express, Discover).
Fraud Protection
Measures offered by issuers to protect against unauthorized transactions.
EMV Chip
A chip embedded in the card enhances security by generating unique transaction codes.
Contactless Payment
A method allowing payment by tapping or waving the card near a compatible terminal.
Zero-Liability Policy
A policy ensuring you’re not held responsible for unauthorized charges.
Credit Freeze
A security measure that prevents new credit accounts from being opened in your name.
Hard Inquiry
A credit check that can slightly lower your credit score is typically performed when you apply for credit.
Soft Inquiry
A credit check that does not affect your credit score is often done for pre-approvals or background checks.
Pre-Approval
A conditional offer of credit based on a preliminary review of your credit history.
Chargeback
A dispute resolution process where a transaction is reversed due to fraud or merchant issues.
Reward Points
Points earned on purchases that can be redeemed for travel, cashback, or other rewards.
Cashback
A percentage of purchases are returned to the cardholder, often as a statement credit or deposit.
Rotating Categories
Cashback or reward categories that change quarterly, requiring activation to earn higher rewards.
Miles
Rewards earned on travel-related credit cards, redeemable for flights, hotels, or travel expenses.
Tiered Rewards
A rewards structure where different spending categories earn varying percentages of cashback or points.
Sign-Up Bonus
A one-time reward is offered to meet a minimum spending requirement within a specified period after account opening.
Redemption Rate
When redeemed for various rewards, the value of reward points or miles (e.g., 1 point = $0.01).
Purchase Protection
Coverage for damaged or stolen items purchased with the card.
Extended Warranty
Additional warranty coverage beyond the manufacturer’s warranty when an item is purchased with the card.
Travel Insurance
Some credit cards offer coverage for travel-related incidents (e.g., trip cancellations and lost luggage).
Car Rental Insurance
Coverage for rental car damages when you pay with your credit card, often secondary to personal auto insurance.
Concierge Service
Personalizor travel, dining, and entertainmeassistance nt is offered with some premium cards.
Virtual Credit Card
A temporary card number is linked to your account for safer online shopping.
Digital Wallet
A service (e.g., Apple Pay, Google Pay) that allows you to store and use your card digitally.
Contactless Limit
The maximum transaction amount for tap-to-pay without additional verification (e.g., PIN or signature).
Revolving Credit
Credit that automatically renews up to your credit limit as long as the balance is paid off.
Deferred Interest
A promotional offer where interest is waived for a period but retroactively applied if the balance isn’t fully paid by the end of the term.
Closed Loop Card
A credit card is usable only at a specific retailer (e.g., store credit cards).
Open Loop Card
A card that can be used anywhere the payment network (Visa, Mastercard, etc.) is accepted.
Credit Bureau
An agency (e.g., Experian, Equifax, TransUnion) that collects and maintains credit information used for credit reports.
Credit Reporting Act
A law regulating how credit information is collected, used, and shared.
Billing Dispute
A formal disagreement with a charge on your statement often requires written notice to the issuer.
Credit Card Lock
A feature allowing you to freeze your card temporarily to prevent new charges.
Subprime Card
A card designed for individuals with poor or limited credit history, often with higher fees and rates.
Teaser Rate
A low promotional APR is offered quickly to attract new customers.