Credit Card Terms, Rates, and Debt Management

A comprehensive vocabulary review of credit card fees, interest rate types, account rules and limits, card actions, and financial distress terminology.

Annual fee

A yearly fee charged by a bank just for holding the credit card.

Late fee

A penalty fee added to your bill if you do not pay by the due date.

Transaction fees

Extra charges for specific actions, like using an ATM or buying things abroad.

Interest rate

The cost of borrowing money, expressed as a percentage of the total amount borrowed.

Introductory APR

A temporary, very low interest rate offered to new cardholders for a short time.

Fixed rate

An interest rate that stays the same and does not change with market conditions.

Variable rate

An interest rate that shifts up or down depending on market benchmarks.

Prime rate (or prime)

The baseline interest rate banks give to their most creditworthy commercial customers.

Default rate

A very high interest rate triggered when a borrower breaks the card rules (like missing multiple payments).

Credit limit

The maximum amount of money you are allowed to borrow on the card at one time.

Grace period

A window of time (usually 21–25 days) where you aren't charged interest if you pay your full balance.

Minimum monthly payment

The smallest amount you must legally pay each month to keep your account in good standing.

Balance transfer

Moving debt from one high-interest credit card onto a different card, usually to get a lower rate.

Secured credit cards

A credit card backed by a cash deposit, which acts as collateral and sets your credit limit.

Default

The failure to repay a debt according to the agreed-upon terms.

Bankruptcy

A legal process for people who cannot pay their debts, offering a fresh financial start but severely damaging credit.

Credit Counseling

A service that helps people manage debt through budgeting and structured repayment plans.