Credit Card Glossary
A comprehensive guide to understanding common credit card terms and financial terminology.
A
Add-on Card
An additional credit card issued to a family member of the primary cardholder, sharing the same credit limit.
Annual Fee
The yearly fee charged by the credit card issuer for the privilege of having the card.
Annual Percentage Rate (APR)
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.
B
Balance Transfer
The process of moving an outstanding credit card debt from one card to another, usually to take advantage of a lower interest rate.
Balance Transfer Fee
A fee charged for transferring a balance from one credit card to another.
Billing Cycle
The period of time between two consecutive statements during which the cardholder can make purchases and accrue charges.
C
Cash Advance Fee
A fee charged when the cardholder withdraws cash using their credit card.
Cashback
A rewards feature that returns a percentage of the amount spent on purchases back to the cardholder.
Chargeback
A transaction reversal meant to serve as a form of consumer protection from fraudulent activity or disputed purchases.
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.
Credit Utilization Ratio
The percentage of a borrower's total available credit that is currently being used.
CVV (Card Verification Value)
A 3 or 4-digit security code on a credit card used to verify that the person making a purchase has the physical card in their possession.
D
Due Date
The date by which the cardholder must make a payment to avoid late fees and interest charges.
E
EMI (Equated Monthly Installment)
A fixed payment amount made by a borrower to a lender at a specified date each calendar month.
EMV
Short for Europay, Mastercard, and Visa. A global standard for credit card payments that uses a microchip to authenticate transactions.
G
Grace Period
A period of time, usually between 20-50 days, during which the cardholder can pay the balance in full without incurring any interest charges.
H
Hard Inquiry
A credit check initiated by a lender when you apply for credit, which can slightly impact your credit score.
I
Interest-Free Period
The duration during which no interest is charged on the credit card purchases, provided the previous month's balance was paid in full.
Introductory Rate
A promotional offer in which the cardholder pays a lower interest rate for a limited time after opening the account.
K
KYC (Know Your Customer)
A mandatory process for financial institutions to verify the identity and address of their customers.
L
Late Payment Fee
A fee charged when the cardholder does not make at least the minimum payment by the due date.
M
MCC (Merchant Category Code)
A four-digit number used to classify a business by the type of goods or services it provides.
Minimum Payment
The smallest amount a cardholder must pay by the due date to avoid late fees and keep the account in good standing.
O
OTP (One Time Password)
A unique, time-sensitive code sent to a user's registered mobile number or email for authenticating a transaction.
Over Limit Fee
A fee charged when the cardholder's balance exceeds their assigned credit limit.
P
POS (Point of Sale)
The time and place where a retail transaction is completed, typically using a card terminal.
R
Rewards Program
Incentives provided by credit card issuers to encourage cardholders to use their cards, such as cashback, points, or miles.
S
Secured Credit Card
A credit card that requires a cash deposit as collateral and is typically used to build or rebuild credit.
Soft Inquiry
A credit check that does not impact your credit score, often used for pre-approval offers or when you check your own score.
U
Unsecured Credit Card
A credit card that is not backed by collateral and is issued based on the cardholder's creditworthiness.
V
Variable Interest Rate
An interest rate that can fluctuate over time based on changes in an underlying index or market conditions.
Z
Zero Liability Protection
A policy that ensures a cardholder is not held responsible for unauthorized or fraudulent charges made on their account.
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