Credit Card Terminology Cheat Sheet
March 1, 2019
When applying for your first credit card, it’s easy to become overwhelmed with all the terminology in the application. Never fear, your guide to understanding APR, variable rates, credit limits, and more is here!
Account activity - List of all transactions (purchases, cash advances, payments, credits, and fees) that occurred since your last statement.
Annual fee - A fee charged on a yearly basis for having the credit card.
Annual percentage rate (APR) - The interest rate charged on unpaid debt stated as a yearly percentage rate. If your balance is $0 at your due date, no interest will be charged. A single card may have multiple APRs. For example, purchases, cash advances, and balance transfers may all have different APRs. Also, a card may have an introductory APR that converts to a regular APR after a specific length of time.
Balance - The total of what is owed to the credit card issuer.
Balance transfer - When you pay off all or part of what you owe on one credit card by transferring the amount to another credit card.
Balance transfer fee - A charge for transferring the balance (or portion of a balance) from one credit card to another.
Card issuer - Bank or credit union that issues credit cards
Cash advance - An on-the-spot cash loan charged to your card. Banks provide printed checks you can use for this purpose or you can use your card at an ATM. Cash advances may have fees, higher interest rates, and no grace period.
Credit available - The amount of credit remaining on your card after your balance and your current charges are subtracted from your total credit limit.
Credit history - A record of your payment behavior used by credit card companies to determine how responsible a cardholder will be in repayment of debts.
Credit limit - The maximum amount a credit card company will allow you to borrow on a single credit card at any one time. Sometimes called a "credit line." If this limit is passed, a fee may be charged.
Credit report - provides the credit history of an individual including inquiries for credit, payment behavior, and borrowing history.
Credit score – A three digit number based on one’s credit report that is used by card issuers to determine how likely an individual is to pay his or her debts on time or become delinquent. There are different reporters of credit scores, but scores range from 300-850; the higher the number, the more likely you are you be approved for a credit card.
Due date - The date by which your minimum monthly payment is due.
Finance charge - The cost of using the credit card during a billing cycle, comprised of interest costs and other fees.
Fixed interest rate - An interest rate that will not change.
Fraud alert - an alert placed on a credit card account by the cardholder or card issuer when fraudulent card activity is suspected.
Grace period - If you have paid off your previous balance on your card, this is the period of time you have to pay for purchases before interest charges apply. There is usually no grace period for cash advances or balance transfers.
Late payment fee - Fee charged to credit account when bill is not paid by the due date. In addition, your interest rate may increase, and your account will be considered "past due." Your account may also be reported as delinquent to the credit reporting agencies.
Method of payment - Many credit cards allow you to pay by mail, phone, or online. A bank may charge a fee if a bank representative assists you with making a last-minute payment.
Minimum payment - The smallest amount you must pay by the due date. You can also pay a larger amount, or even pay off the whole balance. You typically will be charged interest on your remaining unpaid balance and all new charges until the entire debt is paid off. If you do not pay the minimum by the due date, you will likely be charged a late fee.
New balance - This is the amount you need to pay to avoid further finance charges. It represents the total of your previous balance, any new purchases, cash advances, and other transactions—minus any payments and credits.
Other fees - Charges associated with specific actions such as paying late, getting a cash advance, or exceeding your credit limit.
Past due – Minimum payment has not been made by the due date.
Payment due date - The date your payment must be paid by to the card issuer.
Previous balance - The amount you owed at the end of the previous billing cycle.
Terms and conditions –A formal statement of rules and guidelines in regards to the relationship between a credit card issuer and a credit cardholder. Explains the fees and interest charges you will face as a cardholder
Variable interest rate - The interest rate can increase or decrease based on changes in market interest rates.