Credit Card Glossary Terms
Some of the glossary terms you will encounter with your credit-card contract or when completing your application form.
Glossary terms listed A to Z for easy reading
- Additional cardholder – When you have a credit card it is possible to add additional cards to an existing account, this is usually for a family member or a love one. The primary cardholder has full responsibility for ensuring all payments on any additional cards are met. All purchases are shown on your monthly credit card statement.
- Annual percentage rate (APR) – The yearly percentage rate of the finance charge.
- Annual fee – Is a flat, yearly charge similar to a membership fee – Many providers offer “no annual fee” for credit cards today and some lenders who do charge an annual fee are often willing to waiver this to keep your business.
- ATM – Automated Teller Machines, cash point machines, ATM’s allow you to access cash with a credit card or a cash card associated with your bank account. You will need to enter your personal identification number (PIN) into the atm machine to access any cash.
- Authorisation – Every retailer has a purchase limit above which they must seek authorisation from the card issuer before they can complete the sale. This can be done by telephone or electronically at the cash till. Authorisation is used to control credit card fraud. The cardholder’s available credit limit is reduced by any authorised amount.
- Authorisation Amount – Currency amount approved.
- Authorisation Code – A code that an issuer or its authorizing processor provides to indicate approval or denial for an authorisation request.
- Authorisation Date – Date and Time that transaction was authorised.
- Balance Transfer – The process of moving an unpaid credit card debt from one credit card issuer to another. Transfers of the balance owed may occur a one off handling fee even when there is a 0% introductory offer.
- Cash Back – Cash back is when a percentage of the total amount spent on your credit card over a specific period of time, usually monthly or quarterly is returned to you. This is particularly useful if you normally pay your credit card bills in full each month, as it means you get an effective discount on the products bought with your credit card.
- Credit Card Processor – A company that performs authorisation and settlement of credit card payments, usually handling several types of credit and payment cards (such as Visa, MasterCard, and American Express). If merchants wish to sell their products to cardholders, they retain the services of one or more processors who handle the credit cards that the merchant wishes to accept. When a merchant retains the services of a credit card processor, it is issued a merchant ID.
- Credit History – A partial profile of your financial life given within a particular time frame (usually measured in years). It shows the extent to which you pay your bills on time and how much you may owe particular parties. Credit card issuers use this information to decide whether to provide customers with credit cards. If you have been turned down in the past due to a bad credit history you can sometimes still obtain a credit card – see Adverse Credit Cards.
- Credit Limit - The maximum amount of credit you may recieve on your card. Under some circumstances, your card issuer may increase or decrease your credit line.
- Credit Card Number – Unique number assigned to credit card.
- Finance charge – The sterling amount you pay to use credit Besides interest costs, this may include other charges such as cash-advance fees , which are charged against your card when you borrow cash from the lender. (You generally pay higher interest on cash advances than on purchases.
- Fixed rate – A fixed annual percentage rate of the finance charge
- Fraudulent Transaction – A transaction unauthorized by the cardholder of a bankcard. Such transactions are categorized as lost, stolen, not received, issued on a fraudulent application, counterfeit, fraudulent processing of transactions, account takeover, or other fraudulent conditions as defined by the card company or the member company.
- Fraudulent User – An individual who is not the cardholder or designee and who uses a card (or, in a mail/phone order or recurring transaction, an account number) to obtain goods or services without the cardholder’s consent.
- Grace period - A time period, usually about 50 days up to 56 days depending on your branded card issuer, during which you can pay your credit-card bill without paying a finance charge. Under almost all credit-card plans, the grace period only applies if you pay your balance in full each month. It does not apply if you carry a balance forward . Also, the grace period does not apply to cash advances.
- Interest rates on credit-card plans change over time. Some of these adjustments are tied to changes in other interest rates, such as the prime rate or the Treasury Bill rate, and are called variable-rate plans . Others are not explicitly tied to changes in other interest rates and are called fixed-rate plans.
- Introductory rate – A temporary , lower APR that usually lasts for about three months but can be up to 18 months depending on the lender before converting to the normal fixed or variable rate.
- Issuer – Any association member financial institution, bank, credit union, or company that issues, or causes to be issued, plastic cards to cardholders.
- Variable rate – Prime rate (which varies) plus an added percentage (For example, your rate may be PR + 3.9 percent.)