Credit Card Glossary

Annual Fee:

The yearly fee charged by the credit card issuer for the privilege of having the card.

Annual Percentage Rate:

The annual interest rate charged on the outstanding balance of a credit card.

Available credit:

The amount of credit still available to the cardholder after taking into account the current balance and any pending charges.

Billing cycle:

The period of time between two consecutive statements during which the cardholder can make purchases and accrue charges.

Balance transfer fee:

A fee charged for transferring a balance from one cashback credit card to another.

Cash advance fee:

A fee charged when the cardholder withdraws cash using their credit card.

Credit Limit:

The maximum amount of credit extended to a cardholder by the issuer.

Credit Score:

A number that represents the creditworthiness of a person and is calculated based on their credit history.

Due Date:

The date by which the cardholder must make a payment to avoid late fees and interest charges.

EMV:

Short for Europay, Mastercard, and Visa. This is a global standard for credit card payments that uses a microchip to authenticate transactions and prevent fraud.

Grace Period:

A period of time, usually between 20-25 days, during which the cardholder can pay the balance in full without incurring any interest charges.

Hard inquiry:

A credit check that can negatively impact a credit score and is initiated when a lender or financial institution checks a borrower's credit report for the purpose of deciding whether to extend credit.

Introductory rate:

A promotional offer in which the cardholder pays a lower interest rate for a limited time.

Late payment fee:

A fee charged when the cardholder does not make the minimum payment by the due date.

Minimum Payment:

The smallest amount a cardholder must pay by the due date to avoid late fees.

Over limit fee:

A fee charged when the cardholder exceeds their credit limit.

Payment due date:

The date by which the cardholder must make a payment to avoid late fees and interest charges.

Rewards program:

Incentives provided by credit card issuers to encourage cardholders to use their cards, such as cashback or airline miles.

Secured credit card:

A credit card that requires a cash deposit as collateral and is typically used by people with limited or poor credit history.

Soft inquiry:

A credit check that does not impact a credit score and is initiated when a person checks their own credit report or when a lender checks a person's credit report for the purpose of pre-approving a loan or credit offer.

Unsecured credit card:

A credit card that is not backed by collateral and is typically offered to people with good credit history.

Variable interest rate:

An interest rate that can fluctuate based on changes in the market.

Zero liability protection:

A feature offered by many credit card issuers that protects the cardholder from unauthorized transactions and fraudulent activity.