Credit Card Vocabulary - Principles of Business and Marketing (Unit 1)

Credit Card

A plasti (or digital ) card that lets you borrow money from a bank up to a certain limit which you must pay back later.

Credit Limit

The maximum amount you can borrow on a credit card.

Available Credit

How much you can spend (credit limit minus current balance).

Balance

The total amount you owe on your credit card.

Minimum Payment

The smallest amount you must pay each month to keep the account in good standing. Paying this amount keeps you in debt longer.

Statement Balance

The full amount owed on your card at the end of a billing cycle.

Payment Due Date

The date your minimum (or full) payment must be received to avoid late fees.

Late Payment Fees

A penalty charged if you miss the payment due date.

APR (Annual Percentage Rate)

The yearly interest rate charged on unpaid balances. Credit card APRs are often 20% .

Interest

The cost of borrowing money, added to your balance if you don’t pay in full each month.

Compound interest

When interest is charged not just on the original amount you borrowed, but also on the interest that builds up.

Grace Period

The time (usually 21-25 days) after your bill closes when you can pay in full without being charged interest.

Credit Score

A three-digit number (300-850) that shows how responsible your are with credit. Higher = better.

Credit Report

A record of borrowing history, including payments, balances, and any late payments.

Utilization Ratio

The percentage of your available credit you’re using (lower is better).

Revolving Debt

Debt that carries over month to month, ike credit card balances.

Deliquency

When you fail to make a payment on time.

Default

When you’ve missed payments long enought that the lender assumes you won’t pay it back.

Collections

When unpaid debt is turned over to a collection agency, damaging your credit score.

Secured Credit Card

A credit card backed by a deposit (often used to build or rebuild credit).

Rewards Card

A card that offers points, miles, or cash back for spending-but usually comes with higher APRs.

Annual Fee

A yearly fee some credit cards charge just for having the card.

Cash Advance

Borrowing cash from your credit card (usually comes with extra fees and higher interest).

Balance Transfer

Moving the debt from one credit card. sometimes with a lower introductory interest rate.