Credit Card Terms


APR stands for annual percentage rate, and it is the interest rate charged on credit card balances expressed in a standardized, annualized way. The APR is applied each month that an outstanding balance is present on a credit card.

Annual Fee

A yearly fee charged by a credit card company each year for use of a credit card. This is a separate fee from interest rate on purchases. Annual fees were once very common. Many credit card issuers got rid of their annual fees to compete and draw new customers.

Authorized User

Any person who has permission to transact on your credit card account but is not responsible for paying the bill. Authorized users differ from joint credit, in which both parties are obliged to pay.

Balance Transfer

The process of transferring an outstanding balance from one or several credit card accounts to another credit card account. This is often done by consumers looking for a lower interest rate. Many credit card issuers offer introductory balance transfer APRs that are lower than the standard rates.

Billing Statement

Your billing statement is a periodic statement of your Account which tells you the total amount owed to the creditor. The billing statement will also tell you the minimum payment due and the date by which your payment is due.

Cash Advance

A cash advance is a transaction initiated by you from which you obtain cash or other forms of negotiable instruments (travelers checks, money orders, etc).

Credit Score

A credit score is a three digit number that shows how well a person has handled debt. The higher the number, the better. High scores can qualify for larger loans at better rates. Low scores will get poor terms, or denied. There are a variety of credit scores with FICO scores being the most widely used by banks and lenders.

Credit Report

A credit report is a compilation of your credit history with banks, lenders or a business. It contains payment and account history and credit inquiries. Credit reports are viewed by lenders in deciding credit decisions and on what terms. Credit scores are determined by the information in credit reports.

Credit Bureaus

In the United States, three major credit bureaus -- Experian, TransUnion and Equifax -- track individuals' and businesses' credit histories, and compile them into credit reports. Credit card issuers and other lenders use credit histories to decide whether to provide customers with credit, and on what terms.

Credit Card

A credit card is a payment card that is accepted by merchants, and which can be read at the point of sale. Credit cards offer revolving lines of credit to cardholders, which means they have the ability to pay balances over time.


The failure of a consumer to make payments or violate other terms as agreed upon in a credit agreement.

Secured Credit Cards

Secured credit cards can be used exactly like unsecured credit cards except they require collateral. That collateral is a cash deposit with the issuing bank for approval. They are designed for people with no credit or poor credit.

Grace Period

Most credit cards have a grace period for “new purchases.” The grace period extends from the time you make a purchase to the due date of the monthly billing cycle when you made the purchase. As long as you pay off purchases by the time your monthly statement is due, you will not be charged interest on the purchases.

Interest Rate

An interest rate is the price a lender charges for loaning money. On credit cards, interest rates are a little trickier, because lenders set multiple interest rates. For example, you may have a low, teaser (introductory) rate when you open an account, followed by a higher standard rate for purchases, which turns into a penalty rate if you pay late.

Late Payment

Failure to make at least the minimum payment due so that it reaches the creditor by the due date on the Billing Statement.

Line of Credit

A loan with a pre-authorized credit limit established by a creditor.

Minimum Payment

The minimum amount of money you are obligated to pay each month against your credit card balance. It is determined by the size of the balance and the formula the lender uses to determine the minimum amount due.

Terms and Conditions

Terms and conditions is the common name for the document in which credit card issuers describe in detail their practices. After a consumer applies for a credit card and receives it in the mail, the first use of the card turns the terms and conditions into a legal contract.