1099
The 1099-C is an IRS form sent when credit card or other consumer debts are forgiven or canceled by creditors or debt collectors. Forgiven debt totalling more than $600 of the original debt is considered income by the IRS and potentially subject to taxes on federal income tax returns.
1099-C
The 1099-C is an IRS form sent when credit card or other consumer debts are forgiven or canceled by creditors or debt collectors. Forgiven debt totalling more than $600 of the original debt is considered income by the IRS and potentially subject to taxes on federal income tax returns.
Account number
An account number is a unique number assigned by a financial institution to a credit card customer. On a credit card, the account number is usually embossed and encoded on the face of the plastic.
[ad#bidvertiser728x90]
Acquiring financial institution
An acquiring financial institution is a bank that processes and settles a merchant’s daily credit card transactions, and then in turn settles those transactions with the card issuer/association. Merchants must maintain such an account to receive credit for credit card transactions. Daily card transaction totals are deposited in the merchant’s account after settlement and discount fees are deducted. In this way, such a financial institution acquires, or serves as the intermediary, to facilitate the credit transaction and pays the merchant, less a discount fee for the service.
[ad#creditcards.com(babies)468x60]
Additional cardholder
When you have a credit card, it is often possible to add an additional card to the account for use by someone else. The main cardholder remains responsible for making payments on all charges made, whether by the original cardholder or the additional cardholder.
Adjusted balance
The adjusted balance method is a formula many card issuers use to calculate monthly payments. Issuers subtract payments made during the month on a credit card account, along with adding finance charges incurred.
Affinity card
An affinity card is a credit card offered in conjunction with two organizations, one a card issuer and the other a nonfinancial group with which consumers have an affinity. Universities, sports franchises and nonprofit organizations are examples of affinity groups that often offer special discounts or deals for using their credit cards issued in partnership with a major bank.
Algorithm
An algorithm is a predetermined, finite set of steps or calculations in which data are rigorously analyzed. In credit scoring, algorithms are the complex set of calculations that analyze a person’s or a business’s past behavior with credit to determine the level of risk that person or business carries for future loans.
Alternative methods of payment (AMOP)
Alternative methods of payment (AMOP) is a term covers the spectrum of noncash payments, including: credit and debit cards; billing extensions (adding purchases to your telephone or cable TV bill, for example); value access services (frequent flier programs, credit card bonus programs, etc.)
[ad#adbrite728x90]
American Express
American Express, often called AmEx, is one of the main international credit card issuing schemes. American Express issues its own credit cards — unlike Visa and MasterCard — and is responsible for its own relationships with retailers.
[ad#1own(babies)125x125]
Annual fee
An annual (yearly) fee charged by a credit card company each year for use of a credit card. This is a separate fee from interest rate on purchases. While annual fees were once common, they have largely disappeared, although certain types of credit cards — such as secured cards or those that offer airline frequent flier miles as a reward — still often come with an annual fee.
Annual percentage rate (APR)
The annual percentage rate (APR) is the interest rate charged on credit card balances expressed in a standardized, annualized way. This rate is applied each month that an outstanding balance is present.
Application
A credit card application is the document a consumer or consumers sign to request a credit card. It typically asks for personal information such as income and Social Security number to help the card issuer decide whether to extend credit and at what rate. Who signs the application is particularly important. If a husband and wife both apply, for example, then both become individually responsible for the entire debt.
Application fee
An application fee is often charged on credit cards for people with bad credit. Consumers should make sure to ask how much the fee is and how it is applied. Beware of cards that apply fees to the credit card and eat up most of its credit limit.
Approval response
An approval response is an authorization that is received by a merchant when a transaction is approved.
APR
APR stands for annual percentage rate, and it is the interest rate charged on credit card balances expressed in a standardized, annualized way. The APR is applied each month that an outstanding balance is present on a credit card.
Arbitrage
[ad#cjcreditreport125x125]
Arbitrage, also called stoozing, is the practice of taking a free or low interest loan from a credit card company, depositing it in a high-yield savings account, making the minimum payments on the card and pocketing the difference. Consumers who practice arbitrage make money on the interest rate spread between money received and money paid — just like a bank.
Arbitration
Arbitration is an alternative dispute resolution technique that keeps disputes out of the courts. In the credit card industry, consumers usually must accept mandatory and binding arbitration in order to obtain a credit card. IIt eliminates the cardholder’s right to sue the credit card issuer, and instead, forces the parties to settle disputes before an arbitrator.
Association
A credit card association is a group of card-issuing banks or organizations that set common transaction terms for merchants, issuers and acquirers. Some major associations are Visa, MasterCard, American Express and Discover.
[ad#bidvertiser728x90]
ATM (Automated Teller Machine)
An ATM, or automated teller machine, is an interactive terminal with a touch screen or keypad that allows consumers with credit cards or debit cards to withdraw cash, check balances and/or make deposits using the magnetically encoded card to perform transactions. Most ATMs are interconnected via networks, allowing consumers to conduct banking or credit card business anywhere in the world.
Authentication
Authentication is the process of assuring that a credit card transaction has been initiated by an authorized user of that card. From the merchant’s point of view, authentication means getting the right information from the consumer, and having it verified by the transaction network. In recent years, authentication has been stepped up by means including security codes on credit cards.
Authorization
Authorization is an important concept for both credit cardholders and credit card merchant accounts. Every retailer has a purchase limit above which they must seek authorization from the card issuer before they can complete the sale. Such authorization can be done by telephone or electronically at the cash register. Authorization is used to control credit card fraud. Authorization is also the first step in processing a credit card. After a merchant swipes the card, the data is submitted to merchant’s bank, called an acquirer, to request authorization for the sale. The acquirer then routes the request to the card-issuing bank, where it is authorized or denied, and the merchant is allowed to process the sale.
Authorization code
A code that an issuer or its authorizing processor provides to indicate approval or denial for an authorization request.
Authorization date
The authorization date and time is the date and time when a credit card transaction is approved.
Authorization only
An authorization only transaction is a transaction that is created to reserve an amount against a credit card’s available limit for intended purchases; an authorization only transaction is intended for a merchant’s protection, to assure that the credit card has a limit high enough to allow a transaction.
Authorized amount
[ad#adbrite728x90]
(1) In routine credit card transactions, the authorized amount is the approved amount of money to be charged. After transactions are approved, the authorized amount is deducted from the amount of available credit. (2) Currency amount approved.
Authorized transaction
In credit card terminology, an authorized transaction is one that has been approved.
Authorized user
An authorized user is any person who has permission to use a credit card account, but is not responsible for paying the bill. In that way, it differs from joint credit, in which both parties are obliged to pay. In some cases, the user will receive a credit card in his or her name, even though it is linked to someone else’s account.
Automated teller machine (ATM)
An interactive terminal with a touch screen or keypad that allows consumers with credit cards or debit cards to withdraw cash, check balances and/or make deposits using the magnetically encoded card to perform transactions. Most ATMs are interconnected via networks, allowing consumers to conduct banking or credit card business anywhere in the world.
Automatic payment
Automatic payment is a process that authorizes regular withdrawals to be made from checking or other deposit account to pay credit card and other bills.
Available credit
Available credit is the amount that is available to be charged to a credit card amount; the difference between the credit limit and outstanding charges on the account.
Average daily balance
Average daily balance is the method by which most credit cards calculate your payment due. An average daily balance is determined by adding each day’s balance and then dividing that total by the number of days in the billing cycle.
Bad credit
A term used to describe poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. “Bad Credit” can result in being denied future credit.
Balance
On a credit card account or credit line, the balance is the amount owed.
Balance transfer
A balance transfer occurs when the outstanding balance of one credit card (or several credit cards) is moved to another credit card account. This is often done by consumers looking for a lower interest rate. Many credit card issuers offer introductory balance transfer APRs that are lower than the standard rates. Balance transfers usually have fees.
Balance transfer fee
[ad#cc.com-0%-150x150]A balance transfer fee is a fee charged by a credit card company to transfer a balance from one account to another. This fee can be anywhere from 1 percent to 5 percent of the balance amount. The fee may or may not have a cap — in other words, a maximum amount. Contact the credit card issuer for their specific fees.
Balance-to-limit ratio
Balance-to-limit ratio is used in the calculation of credit scores. It compares the amount of credit being used to the total credt available to the borrower. Having a low ratio — in other words, not much debt but a lot of available credit — is good for your credit score. Also known as a credit utilization ratio.
Bank
We all know what a bank is — a financial institution that may take in deposits, lend money or both. But in credit card transactions, multiple banks can and usually are involved, with each bank playing different roles. One bank may issue a credit card to a consumer, another may represent the merchant, and a third may be involved in payment of a credit card bill.
Bank account
A bank account, in consumer terms, is a place to place deposits, acquire loans or both. Bank accounts used to be necessary for credit card or debit transactions, but with the advent of various prepaid products, an individual bank account is no longer required of cardholders.
Bank card
A bank card is a payment card issued by a bank. It may be a debit card, where money is paid in before a transaction can take place, or it may be a credit card, in which a loan is given. Sometimes spelled bankcard.
Bank holding company
A bank holding company is a firm that owns or controls interest in one or more U.S. banks. All of the largest credit card issuers have, at the top of their corporate structure, a bank holding company. Bank holding companies are regulated by the Federal Reserve Board. The board is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is regulated by another state or federal agency.
Bank identification number (BIN)
[ad#creditcards.com(babies)468x60]
A bank identification number (BIN) is the first six digits of a Visa or MasterCard account number. The bank identification number is used to identify the card-issuing institution.
Bankruptcy
In bankruptcy, consumers or businesses seek legal assistance when bills cannot be paid. There are different types of bankruptcies. In some, debts are discharged. In others, debts are restructured and repaid under bankruptcy court supervision. Whatever the type, bankruptcy has a negative effect on the ability to borrow.
Basis point
A basis point is one-hundredth of 1 percentage point. If your credit card rate goes from 16.49 to 16.99 percent, it has risen 50 basis points.
Batching
The second step in processing a credit card. At the end of a day, the merchant reviews all the day’s sales to ensure they were authorized and signed by the cardholder. It then transmits all the sales at once, called a batch, to the acquirer to receive payment.
Billing cycle
The billing cycle is the time between billing statements. With credit card statements, the time between billing statements may vary.
Billing statement
A billing statement is a written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer. Also simply called a statement or monthly statement.
Blocks
With credit and debit cards a “block” may be placed on a portion of a consumer’s credit limit or available debit balance if the final amount of a transaction is unknown. That can happen at gas stations, restaurants or hotels, because the merchant can’t know at the time the card is presented how much you’ll pump, how much you’ll tip or how many drinks you’ll take from the minibar. Consumers near their credit or debit limits need to watch their available balances carefully, or the hold amount could push them over the limit, triggering a fee. Blocks, also called holds, are usually released within minutes or hours, but blocks can sometimes last days.
Breakage
Breakage is a term used in the retail and payments industry to describe how some gift cards will never be used. Breakage is the reason that gift cards can sometimes be bought for less than face value, because the retailer can be sure a certain proportion will go unused.
Business card (business credit card)
A business credit card is sought by corporate executives or business owners in order to separate keep business expenses from personal charges. Often, business credit cards offer business oriented rewards, such as travel benefits.
Carbon-paper packets
In the early days of credit cards, sales were transacted by using carbon-paper packets that fit into a simple sliding device called a zip-zap machine. The card would be put face-up in the zip-zap, a carbon-paper packet of alternating paper and carbon paper would be placed over it, and the tight-fitting slide would be run over both of them. The pressure of the slide would create an impression of the credit card number on the papers — one for the customer, one for the merchant, one for the merchant’s bank. Today, such transactions are rare; most are handled by electronic card readers that take the card information via its magnetic stripe.
Card issuer
Any financial institution, bank, credit union or company that issues (or causes to be issued) plastic cards to cardholders.
Card member
A card member an industry term for an individual to whom a card is issued, or who is authorized to use an issued card. Sometimes spelled cardmember.
[ad#cc.com-0%-150x150]
Card member agreement
The card member agreement provides the terms and conditions of a credit card account. This agreement is required by federal law as a consumer disclosure. It also represents a binding agreement between card issuers and their customers. It must include the annual percentage rate, the monthly minimum payment formula, annual fees and dispute resolution processes. Changes in the cardholder agreement can be made, with written advance notice, at any time by the issuer. Cardholders have the right to cancel their cards if they do not accept such changes in terms, and pay off existing balances under the previous account terms in such instances.
Card present transactions
Card present transactions are those in which a credit card is physically present. Merchants are charged different levels of fees by the card transaction proccessors (such as Visa, MasterCard), depending on the level of fraud risk. Card present transactions, because the card is available for inspection, are considered less risky and therefore carry lower fees than online or phone transactions.
Card reader
A card reader is a device that is capable of reading the encoding on plastic cards. Card readers today are very common at the point of sale.
Carders
Carders are the criminals who buy, sell, steal or conspire to hijack another person’s credit or debit card account information.
Carding
In the credit card world, carding is a term for the activities of carders — thieves who use various means to illegally acquire and use credit or debit card account information for their own gain.
Carding forums
Carding forums are Web sites used to exchange information and technical savvy about the illicit trade of stolen credit or debit card account information.
Cash advance
A cash advance is a cash loan from a credit card, using an ATM, a bank withdrawal or “convenience” checks. Credit card cash advances have many disadvantages for consumers. Generally, you cannot take a cash advance for the full amount of your available credit. The interest rate on cash advances is often significantly higher than it is on purchases or balance transfers. If you carry balancnes with both high-interest cash advances and low-interest purchases on the same card, it is current industry practice to apply payments to the low-rate balance first, increasing total interest rate costs. A transaction fee, which is a percentage of the cash advance, is usually charged. There is typically no grace period for cash advances.
Cash advance check
A cash advance check is a check that is drawn against a credit line, rather than against a checking account balance. Cash advance checks are periodically provided to cardholders and generally result in cash advance fees when used. Also called convenience checks.
Cash advance fee
A cash advance fee is a charge that a credit card issuer charges a customer for accessing the cash credit line on his or her account, either through an ATM, convenience check or at a bank’s teller window. The fee is a percentage of the amount withdrawn, usually with a minimum dollar amount charged for smaller transactions. Finance charges typically accrue from the date of the advance, without a normal grace period that is present with purchases.
Cash advance rate
When consumers take out cash advances, they are usually charged a higher rate. The cash advance rate is higher because these loans are viewed as riskier for banks. The interest rate is typically charged from the moment of the cash advance.
Cash back
In the credit card industry, cash back refers to a rewards program that returns to you a percentage of the total amount spent on your credit card over a specific period of time, usually monthly or quarterly. This feature 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.
[ad#cc.com-creditcardrecommender -150x150]
Cash card
A cash card is a card loaded with a preset value that can be used to withdraw money from ATMs. Depending on the issuer, a cash card can also be used to make purchases. It differs from a check card because it is not linked to an individual’s bank account.
Cashing
Cashing is a form of carding that involves using stolen credit card or debit card information to directly withdraw cash from an identity theft victim’s credit line, credit card or bank account. Also known as “PIN cashing.”
Chapter 11 bankruptcy
Chapter 11 bankruptcy is a legal procedure that allows businesses to reorganize under a court-approved plan. Chapter 11 bankruptcy allows business entities protection from creditors during the reorganization period.
Chapter 13 bankruptcy
Under Chapter 13 bankruptcy, a creditor repays debts under a three- to five-year plan that is supervised by the bankruptcy court. Chapter 13 bankruptcy was encouraged by the 2005 revision to bankruptcy law, which sought to force more debtors to repay debts.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is the most common type of bankruptcy filing for individuals who can no longer pay their bills. While this legal procedure allows debt to be discharged, it is ruinous to credit records, meaning that future loans will be very expensive, if they can be found at all.
Charge card
A charge card is a payment card that requires a full payment of the charge each billing cycle by the statement due date. Unlike credit cards, which give borrowers a revolving line of credit that can be accessed and paid down over time, charge cards do not allow balances to be carried forward and do not charge an interest rate.
Charge-back
A charge-back is a transaction returned through a credit card processing interchange by an issuer to an acquirer. Consumers may, under certain circumstances, dispute a purchase made from a merchant and cause a charge-back. A transaction also may be returned because it was noncompliant with the merchant account rules. Sometimes spelled chargeback.
Charge-back period
The charge-back period is the number of days, from the transaction’s processing date or endorsement date, during which the issuer may initiate a charge-back.
Charge-off rate
[ad#cjmyfico125x125]
The charge-off rate is the amount of charge-offs divided by the average outstanding credit card balances owed to the issuer. Charge-off is actually an accounting term that means a company has decided it has no chance to collect a debt and charges it off its books. A rising charge-off rate is a sign of an economy under stress.
Charge-offs
Charge-offs are the value of uncollected credit card balances removed from the books and charged against a bank’s loss reserves. The rate is the amount of charge-offs divided by the average outstanding credit card balances owed to the issuer. Having a charge-off has a serious, negative impact on a consumer’s credit.
Clearing
The third step in processing a credit card. After the acquirer receives the batch, it sends it through the card network, where each sale is routed to the appropriate issuing bank. The issuing bank then subtracts its interchange fees, which are shared with the card network, and transfers the remaining amount through the network back to the acquirer.
Cloning
Cloning is a technique criminals use to make counterfeit credit cards with working, stolen credit card numbers. The credit card numbers are often obtained through skimming.
Closed loop
Closed loop is a payments industry term for a gift or credit card that can be used only in a single store or group of stores. Closed loop cards rarely have purchase fees, dormancy fees or other fees associated with the general purpose, open loop gift cards.
Co-branded card
A co-branded credit card is sponsored by both the issuing bank and a retail organization, such as a department store or an airline. With co-branded credit cards, cardholders may get benefits, such as discounts or free merchandise, from the sponsoring merchant.
Co-signer
A co-signer is a person who signs an agreement to pay off a loan for someone else if that someone else defaults. Co-signing is a technique often used among family and friends to allow a person with good credit to vouch for a person with new credit or bad credit to get a loan. The presence of a co-signer makes lenders more willing to approve loans for high-risk borrowers. While co-signing allows the person with bad credit to get a loan, it puts the person with good credit on the hook for the entire amount borrowed.
COB fraud
COB fraud — the COB stands for “Change of billing” address — is a scam in which the billing address of a cardholder is changed by a thief who calls or electronically contacts a financial institution so that goods or services purchased using a stolen credit card or bank account can be delivered to the thief.
Collection
In the credit world, collection is an effort by a collections department or agency to get a past-due debt repaid. Having a debt in collections shows up on credit reports, and badly damages the ability to borrow at reasonable rates.
Commercial cards
Commercial cards is a generic name for cards issued for business use. Commercial cards include corporate cards, purchase cards, business cards, travel and entertainment cards.
Consumer credit file
A consumer credit file is the collection of an individual consumer’s debt repayment records, stored at a credit reporting agency (credit bureau). Credit scores are based on consumer credit files, and determine whether an individual will get a credit card or other loan, and at what rate.
Convenience checks
Convenience checks are checks linked to your credit line that can be used just like checks linked to your checking account. Convenience checks can be made in any amount, as long as it does not surpass your credit limit. They are treated like a cash advance, meaning there is no grace period and interest is charged from the moment the check is used. They also tend to have higher interest rates than that charged for purchases.
Corporate card
A corporate card is issued to members of a company, for use on company business. Corporate cards may be credit cards, or they be charge cards, which must be paid off in full monthly. The cards may also have special features installed to prevent or limit their use at certain types of establishments.
Cramdown
A cramdown is a jargon term used to describe the ability of a bankruptcy judge to lower the amount owed by a debtor to a creditor.
Credit bureau
A credit bureau is a company that catalogs and sells information regarding the payment behavior of consumers and issues credit reports with related information. The three major national credit bureaus are Experian, Equifax and TransUnion. Also called a credit reporting agency.
Credit bureau risk score
A credit bureau risk score is a snapshot of a person’s credit history, based only on the information available through credit bureaus. It the risk score evaluates people for the benefit of lenders, to help them decide the risk of whether a debt will be repaid.
Credit card
A credit card is a payment card that is accepted by merchants, and which can be read at the point of sale. Credit cards offer revolving lines of credit to cardholders, which means they have the ability to pay balances over time.
Credit Card Accountability, Responsibility and Disclosure Act of 2009
Signed into law on May 22, 2009, the federal act limits when credit card interest rates can be increased on existing balances, requires 45 days’ advance notice of significant changes in credit card terms and gives consumers at least 21 days to pay their monthly bills. It is also known as the Credit CARD Act of 2009.
Credit CARD Act of 2009
Signed into law on May 22, 2009, the federal act limits when credit card interest rates can be increased on existing balances, requires 45 days’ advance notice of significant changes in credit card terms and gives consumers at least 21 days to pay their monthly bills. It is also known as the Credit Card Accountability, Responsibility and Disclosure Act of 2009.
Credit card number
[ad#cjmyfico125x125]
A credit card number is the unique number imprinted on a credit card. The first six digits on a credit card are called the issuer identification number. They identify the issuer — Discover, or American Express, for example. The remaining digits of a credit card number are unique to the individual card. Credit card numbers are usually embossed, a remnant the days when a physical impression of credit cards were made through zip-zap machines.
Credit freeze
A credit freeze is a service available to consumers through the credit bureaus in which consumers lock down their credit, preventing new accounts from being opened. It is a useful tool in cases where identity theft has been detected or is suspected. The credit bureaus charge fees for establishing credit freezes unless identity theft has occurred. They also charge for “thawing” the credit freeze, should a consumer decide to open a new account.
Credit history
Credit history is the record of use of debt. In the United States, three major credit bureaus — Experian, TransUnion and Equifax — keep the largest databases of credit histories. Credit card issuers use credit histories to decide whether to provide customers with credit cards, and on what terms. What records are kept in your credit history, for how long and how they may be used are regulated by the federal Fair Credit Reporting Act.
Credit inquiry
A credit inquiry is created when a lender pulls someone’s credit record. It creates a record in a credit report of each time the borrower, a lender or a potential lender obtains a copy of the consumer’s credit report. Credit inquiries, especially multiple inquries, may negatively impact credit scores. See hard inquiry and soft inquiry.
Credit life insurance
Credit life insurance is a type of insurance sold by affiliates of credit card issuers. Those who purchase credit life insurance may, under limited circumstances, have the insurance repay outstanding card balances in the event of the death of the primary cardholder.
Credit limit
A credit limit is the amount of money that can be charged to a credit card account. The size of a credit limit, and how much of it has been borrowed, have a large influence on consumer credit scores. Low credit utilization — that is, a credit limit on which little has been borrowed — leads to a higher credit score. Credit limit is also known as a credit line.
Credit line
A credit line is the amount of money that can be charged to a credit card account. The size of a credit line, and how much of it has been borrowed, have a large influence on consumer credit scores. Low credit utilization — that is, a credit line on which little has been borrowed — leads to a higher credit score. Credit line is also known as a credit limit.
Credit monitoring service
A credit monitoring service is one that monitors credit card accounts for suspicious or out-of-pattern activity and sends an alert to the cardholder if such activities occur. Typically there is an annual or monthly fee for the service billed to the primary card being monitored.
Credit obligation
A credit obligation is a legally binding agreement that a borrower undertakes guaranteeing repayment of a loan. A credit card agreement is one example of how a credit obligation is created.
Credit rating
A credit rating is a measure of the creditworthiness of a borrower. In credit cards and other borrowing, credit ratings are calculated by the credit bureaus, based on past payment behavior, income, employment and other factors that serve as a general predictor of ability and propensity to repay debts.
Credit report
A credit report is a compilation of the credit history of an individual or business. It is compiled by one or more of the credit bureaus and contains the detailed history of borrowing, payment behavior and credit inquiries.
Credit reporting agency (CRA)
A credit reporting agency (CRA) is a company that catalogs and sells information regarding the payment behavior of consumers and issues credit reports with related information. The three major national credit reporting agencies are Experian, Equifax and TransUnion. Also called a credit bureau.
Credit score
[ad#cjcreditreport125x125]
A credit score is a three digit number that summarizes how well a person or business has handled debt. The higher the number, the better. Those with high scores can qualify for larger loans at better rates. Those with low scores will get poor terms, or be turned down. There are a variety of credit scores using different formulas; what they have in common is that they judge risk and try to predict future behavior. Factors such as employment, income, credit lines outstanding, debt to income ratio, past payment behavior factor in to a person’s credit score. Fair Isaac Corp. pioneered the use of credit scores, and its product, the FICO score, remains the best known.
Credit union
A credit union is one of many types of financial institutions that can offer credit cards to consumers. Credit unions are organized as cooperatives, and are open to individuals with a common affiliation. That affiliation can be based on employment, geography or interest.
Credit utilization ratio
A credit utilization ratio is used in the calculation of credit scores. It compares the amount of credit being used to the total credit available to the borrower. Having a low ratio — in other words, not much debt but a lot of available credit — is good for your credit score. Also known as a balance-to-limit ratio.
Currency conversion fee
A currency conversion fee is the former name for what has come to become known as a foreign transaction fee. Credit card transaction processors, such as Visa and MasterCard, charge the fee for any transaction that involves a foreign bank. The bank that issues a credit card may also tack on an additional fee.
DD (Regulation DD)
A law that requires depository institutions — such as banks, thrifts and savings and loan associations — to disclose any fees, interest rates or other charges assessed to deposit accounts. This includes any overdraft or other fees associated with transactions processed through debit cards linked to savings accounts. Also called the Truth in Savings Act or the FDIC Improvement Act of 1991.
Deadbeat
A “deadbeat” is the unflattering credit card industry term for consumers who pay off their balances every month, using the lenders money but paying no interest on it.
Debit
[ad#1own(babies)468x60]
A debit, in accounting terms, is a charge to an account. To consumers, a debit is a charge to a customer’s bank card account. Cards tied to a checking or savings account are often called debit cards because consumers use them to take money from those accounts, creating debits. Debit transactions can be made by writing a check, using an automated teller machine (ATM) withdrawal or taking money back from a merchant at the point of sale (POS).
Debit card
While debit cards and credit cards are alike in appearance, they differ in one critical aspect: A debit card withdraws money from a bank account, while a credit card creates a loan. Think of them as “pay now” (debit) versus “pay later” (credit). Today’s debit card users often have the choice of authorizing transactions by either PIN or signature. While that choice often makes no differnece to the consumer, it makes a great deal of difference to the merchant and transaction processors. A PIN transaction uses one payment system, the signature uses another, each carrying different fees.
Debt
A debt is an amount owed. In credit card terms, debt is in the form of a charge to a customer’s bank card account. A credit card debt can be incurred to a credit card account through use of the card to purchase goods or services, by cash withdrawal at an ATM, or by use of “convenience checks.” Credit card debts have higher interest rates than rates for other types of loans. That’s because they are unsecured debts, unlike mortgages or car loans, in which the lender can seize property if the debt is unpaid.
Debt consolidation
Debt consolidation is the combination of multiple loans with a new, single loan offering a lower monthly interest rate and payment, or a longer repayment period. In the context of credit card debt, this often involves a balance transfer from several high-interest cards to a single lower interest card.
Debt-to-income ratio
debt-to-income ratio is the ratio of all personal debt — including credit card debt — to gross (personal) income. For consumers, debt-to-income ratio comes into play when they attempt to qualify for a mortgage. A high amount of credit card debt can force a consumer into paying higher rates on a mortgage, or could even cause it to be denied.
Debtor
A debtor is an individual who or company that has borrowed money and has a legal obligation to pay money back to another individual or company.
Default
To default is to fail to make a payment on a debt by the due date. If this happens with a credit card, creditors might raise interest rates to the default (or penalty rate) or decrease the line of credit. In case of serious delinquency, the card issuer can even take legal action to enforce payment or to garnish wages.
Default APR
If you are late in making payments, your standard APR may increase to a default APR. Default APRs may be applied to all outstanding balances on your credit card. Also called penalty rate.
Default rate
The default rate, also called the penalty rate, is the very high interest rate charged by the credit card issuer when a borrower violates the card’s terms and conditions. The penalty rate is most often triggered by late payments or going over the card’s limit.
Deleveraging
In economic terms, leverage means to use a loan to acquire an asset. Deleveraging, then, is the process of reducing the size of the loan. When economists say the American public is deleveraging, it simply means we’re paying off debt.
Delinquent account
A delinquent account is a credit card account for which the cardholder has not made at least a minimum payment more than 30 days past due.
Direct mail
Despite growth in online credit applications, direct mail is the means by which the most credit card offers are delivered, and accepted.
Discount rate
The discount rate is the fee paid by merchants to credit card processors as a fee associated with accepting general-use credit cards (such as Visa, MasterCard, American Express and Discover). Typically this fee runs between 1 percent and 3 percent, depending on the nature of the transaction.
Discover Card
Discover, the newest of the payment card brands, formed in 1986. Company now has more than 50 million card members, but is the smallest of the four payment brands in terms of market share. Discover Card’s payment networks — Discover Network and PULSE — together processed more than 3 billion transactions in 2006. Like American Express, but unlike Visa and MasterCard, Discover acts both as a card-issuing bank and as a transaction processing network.
Distributor
The term distributor has many meanings, but in the context of prepaid stored value card programs, distributors sell the cards themselves.
Dormant account
A dormant account is a bank account with infrequent or no use. In the case of credit cards, if no activity is recorded for the account, some card issuers will close the account and revoke charging privileges. A dormant account is also called an inactive account.
[ad#bidvertiser728x90]
Double-cycle billing
Double-cycle billing is the balance computation method used by some issuers that allows them to apply interest charges to two full cycles of card balances, rather than the most recent billing cycle’s balances. Two-cycle billing effectively eliminates the grace period for people who paid off a balance in the previous month. Double-cycle billing was heavily criticized by consumers and federal regulators banned the practice, beginning in July 2010. Also called two-cycle billing.
Drop
A drop is the address used by carders to deliver goods or services for re-sale that were purchased with stolen credit card or bank account information.
Due date
Credit card bills have a due date. If your credit card payment does not arrive — and get posted — by the due date, you will be charged a late fee. It’s important for credit cardholders to watch their payment due dates, since they sometimes change. Some credit card issuers allow their customers to set their own due dates.
Dump
[ad#cc.com-Creditcardair-travelrewards-728x90]
A dump is an electronic copy of the magnetic stripe of a credit card, used by carders and cybercriminals to counterfeit credit and debit cards
Emancipated minor
An emancipated minor is someone who has not yet reached the age of majority — usually 18 — but has by court order or actions become independent of his parents or other adult supervisors. An ordinary minor may not enter into binding financial contracts, such as credit card agreements. An emancipated minor can.
Embossed
On most credit cards, the credit card numbers are embossed, that is, raised above the surface of the card. It once was necessary when the common way of approving credit card transactions involved making a physical impression of the numbers via carbon packets and a “zip zap” machine. Today, with most card transactions handled electronically, embossed numbers are just a manufacturing habit.
Encryption
In credit card terms, encryption is the process of encoding credit card information for secure transmission through credit card processing networks or across the Internet.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act was enacted by Congress in 1974 to prohibit discrimination in lending. It applies to all types of consumer lending, including credit cards.
[ad#bidvertiser728x90]
Expired card
An expired card has an embossed, encoded or printed expiration date that has passed. How long it will take a card to expire depends on the card issuer’s policy and the credit record of the credit cardholder.
Fair Credit Billing Act
The Fair Credit Billing Act is a federal law enacted to protect consumers from unfair billing practices, such as unauthorized charges, charges for unaccepted or undelivered goods and services and other disputed charges. The law applies to revolving charge accounts and open-end credit accounts, such as credit cards. To dispute a charge, send the creditor your name, address, account number and a description of the billing error to the address given for “billing inquiries.” The creditor must receive the letter within 60 days of sending the flawed bill and must acknowledge your complaint in writing within 30 days after receiving it. The dispute must be solved within two billing cycles, but no more than 90 days.
Fair Credit Reporting Act
The Fair Credit Reporting Act was enacted to govern how credit bureaus maintain, share and correct information in credit reports. It sets out, for example, a method by which consumers can force inaccurate information to be removed from credit files.
Fair Isaac
Fair Isaac is the company that created the popular FICO credit score. Fair Isaac renamed itself FICO, after its credit score, in March 2009.
[ad#1own(married)468x60]
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is the federal agency that ensures deposits won’t be lost due to insolvency by a bank, thrift or community banks. It also monitors banks, including those that issue credit cards, for solvency and requires them to maintain certain levels of capital. The FDIC insures checking accounts, savings accounts and certificates of deposit to member banks up $250,000 per depositor.
Federal funds rate
The federal funds rate is an interest rate set by the Federal Reserve Board’s Federal Open Market Committee. It is the rate at which banks will loan each other money overnight, and it is an important rate to holders of variable rate credit cards. That’s because the federal funds rate is precisely three points lower than the prime rate, and the prime rate is the index used to set interest rates on variable rate credit cards. So when holders of variable rate credit cards read “Fed raises rates,” it means the rates are going up on their credit card balances. The Fed will raise the federal funds rate to lower inflation; it will lower the rate to stimulate a lagging economy.
Federal Reserve Board
The Federal Reserve Board is the central bank of the United States. It’s name is often shortened to “The Fed.” Its importance to credit cards is that the Federal Reserve Board sets a key interest rate, the federal fund rate. Many credit card issuers with variable rate cards peg their cards’ rates to the prime rate. The prime rate, in turn, moves in lock step with the federal funds rate. If the Fed raises the federal funds rate, that raises the prime rate, and many consumers rates go up, too.
FICO score
[ad#cjmyfico125x125]
A FICO score is a particular type of credit score — one offered by the Fair Isaac Corp., which pioneered their use. Like other credit scores, a FICO score is a three digit numeric value that assesses a borrower’s credit risk. The higher the number, the more likely the loan is to be repaid. People with low FICO scores get charged higher interest rates to make up for the added risk. People with high FICO scores get the best deals. FICO scores are calculated by the credit bureaus using complex formulas that predict future debt repayment behavior. Factors such as employment, income, credit lines outstanding, debt to income ratio, past payment behavior factor in to a person’s FICO score.
Finance charge
A finance charge is the total cost of borrowing, including interest and fees, expressed in a dollar amount.
Fixed rate (or fixed APR)
An annual percentage rate that does not change throughout the year, unlike an introductory APR that changes after a specific period of time.
Fleet cards
Fleet cards are designed chiefly for business use. Fleet cards are commercially issued cards that target auto expenses for a business. They typically allow a business with many vehicles to enable drivers to easily purchase fuel and transportation supplies, and to easily track those purchases.
Float
In credit card terms, the float is the difference in time between when a transaction occurs and the time it is posted to a credit card account, often one to two days.
Floor
An interest rate floor is set by the issuer of a variable rate credit card issuer as the minimum annual percentage rate it will charge. Usually, variable credit card interest rates are pegged to the prime rate, which moves up and down in accord with the federal funds rate set by the Federal Reserve. However, when the Fed cuts rates severely, cards with floors will not pass those rate cuts along.
Floor limit
An amount that Visa and MasterCard have established for single transactions at specific types of merchant outlets and branches, above which authorization is required.
Forbearance
Forbearance programs are established by credit card companies to give temporary relief to overstretched cardholders. They can take several forms, among them: postponing payments for six months to a year or even longer; lowering minimum payment monthly payments; reducing interest rates; eliminating some fees. Forbearance is not forgiveness — consumers still must repay the credit card debt.
[ad#bidvertiser728x90]
Foreign transaction fee
Foreign transaction fees are charged by most credit card companies on purchases made in a foreign currency, or on purchases that involve a foreign bank (regardless of whether a foreign currency is used). Usually, foreign exchange fees are a percentage of the amount of each foreign currency purchase, with no minimum or maximum. Sometimes this fee is called a foreign exchange fee. It once was called a currency conversion fee. Foreign transaction fees are charged by U.S. transaction processors such as Visa and MasterCard. The card issuing bank may choose to pass that fee along to consumers; most do, and some tack on their own fees.
Fraud alert
A fraud alert is a security alert placed on a credit card account or credit bureau listing by either the customer or the issuer when a fraudulent account activity is either experienced or suspected. Fraud alerts are also known as credit freezes.
Fraudulent transaction
A fraudulent transaction is one unauthorized by the credit cardholder. 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
A fraudulent user is an individual who is not the credit cardholder or designee and who uses a credit card account to obtain goods or services without the cardholder’s consent.
Fulls
Fulls are packages of stolen credit card and bank account information and identifying characteristics. They’re called “fulls” because each unit within contains the full set of information needed for successfully committing credit card fraud — such as an individual’s mother’s maiden name, computer passwords, CVV (three-digit security) and PIN numbers. Often, they are illegally traded in online carding forums, and sell at a premium to other fraudulently obtained credit card information.
[ad#cc.com-needhelpdeciding728x90]
Funding
The fourth and final step in processing a credit card. After receiving payment from the issuer, minus interchange fees, the acquirer subtracts its discount fee and sends the remainder to the merchant. The merchant is now paid for the transaction, and the cardholder is billed.
Gift card
A gift card is a type of stored-value payment card commonly issued by retailers and banks. Gift cards are preloaded with a set value. There are two major types of gift cards — those that can be used only at one store chain or one location (closed loop) and those that can be used anywhere (open loop). The closed loop variety of gift cards generally carry no fees or expiration date — the issuing store makes its money off the profit from selling merchandise. The open loop cards always carry fees; because they are issued by banks or credit card transaction processors, such as Visa or MasterCard, fees are the only way they can profitably issue gift cards.
Go-to rate
The go-to rate is the interest rate charged on a credit card after the introductory, or “teaser,” period ends.
Grace period
The grace period is the time during which you are allowed to pay your credit card bill without having to pay interest. The grace period varies by credit card issuer. In recent years, the grace period has been shortening; 28 days used to be common, 21 days is common now. The grace period usually applies only to new purchases. Most credit cards do not give a grace period for cash advances and balance transfers; instead, interest charges start right away. If you carried over any part of your balance from the preceding month, you may not have a grace period for new purchases. Instead, you may be charged interest as soon as you make a purchase, in addition to being charged interest on the earlier balance you have not paid off.
Hard inquiry
Hard inquiry is a credit scoring term. It describes when a consumer has applied for a loan. The potential lender checks the consumer’s credit report, which creates a small negative impact on the consumer’s credit score. An occasional hard inquiry, or a quick burst of hard inquiries, have little impact on credit scores; the credit scoring formulas recognize routine loan shopping. What hurts a credit score most are multiple hard inquiries over a long period. A hard inquiry is also known as a “hard pull.”
Hard pull
Hard pull is a credit scoring term. It describes when a consumer has applied for a loan. The potential lender checks the consumer’s credit report, which creates a small negative impact on the consumer’s credit score. An occasional hard pull, or a quick burst of hard pulls, has little impact on credit scores; the credit scoring formulas recognize routine loan shopping. What hurts a credit score most are multiple hard pulls over a long period. A hard pull is also known as a “hard inquiry.”
Hold
With credit and debit cards, a “hold” may be placed on a portion of a consumer’s credit limit or available debit balance if the final amount of a transaction is unknown. That can happen at gas stations, restaurants or hotels, because the merchant can’t know at the time the card is presented how much you’ll pump, how much you’ll tip or how many drinks you’ll take from the minibar. Consumers near their credit or debit limits need to watch their available balances carefully, or the hold amount could push them over the limit, triggering a fee. Holds, also called blocks, are usually released within minutes or hours, but can sometimes last days.
[ad#bidvertiser728x90]
In-house
In credit card terms, in-house describes store credit cards owned and operated directly by the retailer.
Inactive account
An inactive account is a bank account with infrequent or no use. In the case of credit cards, if no activity is recorded for the account, some card issuers will close the account and revoke charging privileges. An inactive account is also called a dormant account.
Index
An index is a benchmark rate, such as the prime rate or LIBOR, to which a margin is applied to calculate a variable interest rate. For example, if your credit card agreement says your interest rate is prime plus 10 percent, and the prime rate is at 5 percent, your credit card’s interest rate will be 15 percent.
Inquiry
In credit terms, an inquiry is created when a lender looks at your credit report to see whether to loan you money. An inquiry can be “soft,” as when a credit card issuer prospecting for new customers looks at your report to see whether to mail you an offer. Or an inquiry can be “hard” — that is, initiated because you yourself have applied for a loan. Hard inquiries have a slight, negative impact on your credit scores. Soft inquiries have no effect on credit scores.
[ad#adbrite728x90]
Interchange fee
The interchange fee, also called the discount rate, is the sum paid by merchants to the credit card processor as a fee for accepting credit cards. The amount of the rate will vary, typically between 1 percent and 3 percent of the purchase amount, depending on the type of transaction. For example, the interchange fee is higher for online purchases than for in-person purchases, because in the latter, the card is physically present and available for inspection.
Interest rate cap
An interest rate cap is the maximum amount of interest that can be charged to a customer. Rate caps may be imposed by a credit card agreement, or by state or federal law.
Introductory period
In credit cards, the introductory period is the length of time during which the introductory annual percentage rate is in effect. The APR will usually go up after the end of the introductory period.
Introductory rate (or intro APR)
Introductory annual percentage rate (APR) is a low rate offered by a credit card company as an incentive to apply for the card. The APR will usually go up after the introductory period is over. The introductory rate is also known as the teaser rate.
[ad#cc.com-needhelpdeciding728x90]
Issuer
A credit card issuer is any financial institution that issues, or causes to be issued, credit cards. Consumers often think that their credit cards are issued by MasterCard or Visa; they’re not. Those companies are credit card transaction processors, not card issuers.
Issuer identification number (IIN)
If you look at a credit card’s numbers, the digits are divided into two parts. The first six digits are the issuer identification number. When you make a purchase with a credit card, the processing system first looks at the first six digits, which identify the issuer. The remaining digits identify your specific account.
Joint account
A joint account is a bank account equally shared by two or more individuals. Parties involved all share the associated rights and liabilities of the account and are regarded by law as co-owners of the account. This means that if anything happens to the account, such as defaults, overdrafts and fraud, all parties are affected.
Joint credit
Joint credit is when two or more people share credit. Sometimes, it is used by couples when one person has little or bad credit, or they need to make a big purchase, such as a house. It is based on both people’s combined assets, incomes and credit report and makes both parties responsible for repaying any debt. If couples enter into joint credit, they are both responsible to repay any debt. In that respect, it is different from having an authorized user on an account, an arrangement in which case only one person is responsible for repayment.
Key
Key is a term used in the data storage and encryption that takes place during the credit card authorization process. Keys, as the name implies, lock and unlock — in this case, data. When credit card numbers are stored or transmitted, they are electronically disguised to prevent thieves from stealing them. One commonly used method is the triple DES encryption, which has a 192-bit key.
Late payment fee
[ad#cc.com-0%-150x150]
A late payment fee is charged to a borrower who misses paying at least their minimum payment by the payment deadline. In order to avoid late fees, ensure that you pay at least the minimum amount by the due date. Late payments may affect your credit history negatively, even if your entire outstanding balance is later paid in full.
LIBOR
LIBOR (the London Interbank Offered Rate) is benchmark rate used as an index in setting many consumer variable rate loans. The LIBOR itself is based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). Like the consensus prime rate, it is often used as a referenced rate on which many variable interest rates are based.
Line of credit
A line of credit is an open-ended, revolving loan, in which the borrower may access money up to a certain limit, pay it back and borrow it again. Periodic interest charges will go up and down, depending on how much is borrowed. Lines of credit may be secured (as with home equity line of credit) or unsecured (as with credit cards).
Linked transfer account
A linked transfer account is one in which a consumer’s checking account is linked to another account at the same bank. The linked account can be a savings or a credit card account. If a checking overdraft occurs, the bank will transfer money from the customer’s other accounts linked to the checking account.
Loyalty programs
Loyalty programs are used by many credit card issuers to maintain or create customers by giving them incentives to use a specific card. Loyalty programs usually have their own cards, called rewards cards, points cards, discount cards or member cards. For example, some airlines offer loyalty credit cards that grant their users discounts on flights if they spend achieve cumulative spending goals.
Magnetic stripe
A stripe of magnetic information that is affixed to the back of a plastic credit or debit card. It can be black, brown or silver in color. The credit card’s magnetic stripe contains three tracks of data. Each track is about one-tenth of an inch wide. The first and second tracks in the magnetic stripe are encoded with information about the cardholder’s account, such as their credit card number, full name, the card’s expiration date and the country code. Additional information can be stored in the third track. With the new generation of credit cards, such as contactless cards, no magnetic stripe is needed.
Mail/phone order merchant
A mail/phone order merchant is one that transacts credit card business by mail or phone. Because that merchant cannot physically check the credit cards that its customers use for payments, the transaction processors, such as Visa and MasterCard, charge that merchant higher fees to process credit card transactions.
Mail/phone order transaction
A mail or phone order transaction is one in which a cardholder orders goods or services from a merchant by telephone, mail or other means of telecommunication, and where neither the card nor the cardholder is present at the merchant outlet. Card processing companies such as Visa and MasterCard charge higher fees to the merchant for such transactions.
Man in the middle fraud
A “man in the middle” attack is a type of fraud that attacks mobile payment devices. In man in the middle attacks, fraudsters are able to intercept information as it gets transmitted wirelessly through the airwaves. Additionally, cell phone worms or malware designed to snatch the data from mobile devices such as iPhones represent a challenge.
Mandatory binding arbitration
Mandatory binding arbitration is a contract clause commonly added by credit card issuers. It eliminates the cardholder’s right to sue the credit card issuer, and instead, forces the parties to settle disputes before an arbitrator.
MasterCard
[ad#cc.com-0%-150x150]
MasterCard is a global bank card payment transaction processor, whose portfolio of brands and products include Maestro, Cirrus and MasterCard PayPass. It partners with financial institutions that issue credit cards, and with merchants who accept those cards. MasterCard offers a network of more than 28 million acceptance locations around the world and, in many cases, guarantees payment through its system. Through its merchant agreements, it sets payment and charge-back policies that affect consumers. It does not, however, issue cards, set annual fees, determine annual percentage rates on cards or solicit merchants to accept cards.
MasterCard acquirer
A MasterCard acquirer is a company that signs a MasterCard merchant agreement or disburses currency to a MasterCard cardholder in a cash disbursement, and directly or indirectly enters the resulting transaction receipt into interchange.
MasterCard card
A card that bears the MasterCard symbol, enabling a MasterCard cardholder to obtain goods, services or cash from a MasterCard merchant or acquirer.
MasterCard issuer
A MasterCard issuer is a financial institution that issues MasterCard cards.
MCC (merchant category codes)
Every transaction processed by the card networks (Visa and MasterCard) is assigned a merchant category code (MCC), a four-digit number that denotes the type of business providing a service or selling merchandise. MCCs are used by card issuers to categorize, track or restrict certain types of purchases.
[ad#bidvertiser728x90]
Medical identity theft
Medical identity theft is the theft or unauthorized use of a person’s personal information to obtain unauthorized medical goods and services.
Merchant
An entity that contracts with merchant banks or ISOs to originate transactions.
Merchant agreement
A merchant agreement is the written agreement between a merchant and a bank that contains their respective rights, duties and warranties, with respect to acceptance of the bank card and matters related to the bank card activity.
Merchant bank
A merchant bank is one that has a merchant agreement with a merchant to accept(acquire) deposits generated by bank card transactions.
Merchant category code (MCC)
Every transaction processed by the card networks (Visa and MasterCard) is assigned a merchant category code (MCC), a four-digit number that denotes the type of business providing a service or selling merchandise. MCCs are used by card issuers to categorize, track or restrict certain types of purchases.
Minimum finance charge
You will be charged a minimum finance charge if the calculated amount of your finance charge is less than the minimum finance charge set by your credit card company for a billing cycle. For example, your finance charge may be calculated to be $0.35 but if the company’s minimum finance charge is $0.50, you’ll pay $0.50. A minimum finance charge applies only when you must pay a finance charge — that is, when you carry over a balance from one billing cycle to the next. Not to be confused with minimum payment.
Minimum payment
The minimum payment is the lowest amount of money that you are required to pay on your credit card statement each month. See your credit card “terms and conditions” document to see how your credit card’s minimum payment is calculated.
Monthly periodic rate
The monthly periodic rate is part of the formula used in computing consumers’ credit card bills. It is multiplied by the amount of a cardholder’s outstanding credit card balances to come up with the interest rate charge for a billing cycle.
Mutual savings bank
A mutual savings bank is one of many institutions that can offer credit cards to consumers. Mutual savings banks accept deposits, primarily from individuals. They are state chartered, so their primary regulator is their home state’s banking agency.
National bank
When banks form, they can choose to be incorporated as state-chartered or as national banks. A national bank is regulated and supervised by the Office of the Comptroller of the Currency (OCC). National banks are the sources of the majority of credit card in the United States. The OCC regulates and supervises more than 1,600 national banks and about 50 federal branches of foreign banks in the U.S., which accounts for about two-thirds of the total assets of all U.S. commercial banks. National banks are also required to belong to the Federal Deposit Insurance Corporation, and to be members of the Federal Reserve.
National issuers
National issuers are banks that issue credit cards to all 50 states. They are different than regional issuers that supply cards on a regional, state or on a smaller scale.
New balance
New balance is the balance owed on a credit card after the unpaid balance from the previous billing cycle and new purchases, finance charges and other fees are added together.
Nondischargeable debt
A nondischargeable debt is a debt that cannot be cleared away — in legal terms, “discharged” — after filing for bankruptcy. Examples of such debt vary between Chapter 11 and Chapter 7 bankruptcy, but both include family support, unpaid taxes and fines related to criminal charges.
Office of the Comptroller of the Currency (OCC)
The Office of the Comptroller and the Currency (OCC) is a government agency, a division of the Treasury Department, that is responsible for regulating the national banks that issue credit cards in the U.S.
Office of Thrift Supervision
The Office of Thrift Supervision (OTS) is the primary controller of federal and state savings associations and savings and loan companies, also known as thrifts. While home mortgages and savings accounts are the traditional core of S&Ls, they also may issue credit cards.
Online bill presentment and payment
Online bill presentment and payment is a process that allows consumers to receive, view and pay certain bills online via computer, by transferring money from their checking accounts or charging bills to their credit card. Online bill presentment means that bills arrive online, not by mail.
Online financial transaction
An online financial transaction is one that is authorized, cleared and settled in a single online session.
Open loop
Open loop is a term used to describe general purpose cards that carry the American Express, Discover, MasterCard or Visa logo and can be used wherever those cards are accepted. Closed loop cards, by contrast, can be used only in a single store or group of stores.
Over-limit
Being over-limit, or over the limit, refers to a cardholder account that has surpassed its credit limit with a transaction. When cardholders attempt to make purchases that will put them over their credit limit, the card issuer may decline the transactions or, as has become more common in recent years, may charge consumers hefty over-limit fees.
Over-limit fee
A fee charged when your balance goes over your credit limit (also known as over the limit fee).
Overdraft protection
Overdraft protection is a service that automatically transfers funds from one bank account to another in order to avoid overdraft fees when insufficient funds are available. It can apply to savings accounts, checking accounts, lines of credit or credit cards. Overdraft protection carries its own fees, however. Sometimes the service is automatically applied when an account is opened and the customer must opt out; other times consumers must sign up for the service.
Password
A password is a sequence of characters that allows users access to a system. Passwords are required to access online bank accounts. A PIN number is another type of password.
[ad#bidvertiser728x90]
pay to pay
A phrase used to describe the practice of charging customers fees to process bill payments.
Payment due date
The payment due date is the monthly date when at least a minimum payment is due to be paid on a credit card account. It may not fall on the same date each month.
Payments network
In a prepaid stored value card program, a payments network provides the connection between the processor and retailer, ATM, etc., for authorization of payment transactions.
Payroll card
A payroll card is a reloadable plastic card that can be used in place of traditional paychecks. There often are fees for using payroll cards, but they allow companies to pay workers who do not have bank accounts.
[ad#adbrite728x90]
Penalty rate
The penalty rate, also called the default rate, is the very high interest rate charged by the credit card issuer when a borrower violates the card’s terms and conditions. The penalty rate is most often triggered by late payments or going over the card’s limit.
Per transaction fees
In credit card merchant accounts, fees are paid per transaction: Each time a merchant accesses the payment processing system to authorize a customer’s purchase, the merchant is charged a fee.
Phishing
Phishing is a criminal technique that uses computers to steal credit or debit card or bank account information. Consumers often see phishing attempts in the form of fake e-mails that mimic those of banks. Consumers who click on such copycat e-mails will be transferred to a phony site that will try to dupe them into entering Social Security or bank account numbers.
Piggybacking
Piggybacking is the act of improving your credit score or rating by becoming an authorized user on someone else’s credit card. By doing this, you receive all the benefits of having good credit without actually having built any of the credit yourself. It is most often used by parents with their children or with spouses. In recent years, the practice has become controversial because companies sprang up to act as middlemen, matching up strangers — one with bad credit, one with good.
[ad#bidvertiser728x90]
PIN (personal identification number)
A PIN, or personal identification number, is a series of digits used to verify the identity of the holder of a card. The PIN is a kind of password. Consumers often may choose whether to authorize a debit card transaction by signature or PIN; while it may make no difference to consumers, the choice means they are choosing different transaction processing systems.
PIN cashing
PIN cashing is a type of fraud that involves using stolen credit card or debit card information to directly withdraw cash from an identity theft victim’s credit line, credit card or bank account.
Plastic (card)
A generic term that is used to identify any of the various cards issued to cardholders.
Point of sale (POS)
The point of sale, or POS, is the location in a merchant’s establishment at which the sale is consummated by payment for goods or services received.
Post date
[ad#cj-equifax-125x125]
In credit card terms, the post date is the date upon which cardholders’ purchases are recognized on the books of their credit cards’ issuers.
Posting
The process of updating individual cardholder account balances to reflect merchandise sales, instant cash, cash advances, adjustments, payments and any other charges or credits.
Pre-approved
A conditional offer of credit from a credit card issuer based on a pre-qualification of the individual’s credit from an abbreviated credit bureau report. Upon acceptance of such an offer, the issuer makes a credit decision (usually after obtaining more detailed credit information) and assigns an annual percentage rate based on the most up-to-date credit profile of the customer.
Prepaid cards
A prepaid card is a form of secured card that is tied to a previously deposited cash balance. Purchases made with prepaid cards are checked for approval against existing funds. Essentially a stored-value card, they usually carry major association logos and can be spent in the same way.
Primary account number (PAN)
The number that is embossed and/or encoded on a plastic card that identifies the issuer and the particular cardholder account.
Prime rate (or prime interest rate)
The prime rate used to be defined as the interest rate at which banks lend to their most creditworthy (prime) customers. Now, it is simply an index that is 3 percentage points above the federal funds rate set by the Federal Reserve. Banks set their own rates, but tend to move in unison. The most common measure of the prime rate is the Wall Street Journal prime rate, which surveys banks on their prime rates. Variable rate credit cards are usually pegged to the prime rate, with the cards’ rates set at the prime plus a margin.
Private label credit card
Private label credit cards are cards branded for a specific retailer, independent dealer or manufacturer. If the retailer does not manage the private label card, a third-party issues the cards and collects the payments from cardholders. Terms and conditions for private label credit cards are made by contracts between the retailer and the third party. Retailers prefer to have their own card because it offers customers another way to shop with them, thus increasing sales.
Processing date
The date on which the transaction is processed by the acquiring bank.
Processor
In prepaid stored value card programs, a processor facilitates payment transactions and tracks and distributes funds in pooled accounts.
Program manager
A program manager is the owner of a prepaid stored value card program. The program manager typically is responsible for establishing relationships with processors, banks, payments networks and distributors and for establishing pooled account(s) at banks.
Purchase rate
[ad#cc.com-0%-150x150]
A purchase rate is the interest rate charged on regular purchases put on a credit card. It differs from a cash advance rate in that it is lower because banks and issuers view regular purchases as less risky.
Qualifying ratio
Qualifying ratios are ratios lenders use to assess a loan applicant’s ability to meet debt obligations. They are most commonly used in mortgage underwriting. They include a front end ratio, which is a percentage of monthly income before tax that is used for a house payment; and a back end ratio, which is the percentage of income compared to the combined monthly debt from house, car, credit card and other loan payments. Whether a ratio is acceptable can fluctuate from lender to lender and vary with market conditions, but if the ratios of debt to income are too high, an applicant won’t be approved for a loan.
Rate tart
Rate tart is a term used in the UK to describe someone who transfers balances repeatedly, chasing the lowest possible rate. When credit tightens, rate tarts can be forced into interest-rate monogamy.
Receipt
A hard copy document that records when a transaction took place at the point of sale. The receipt contains a description of the transaction, which usually includes the date, the merchant name/location, a portion of the primary account number, the amount and the reference number. Since 2007, federal law has required that account numbers on credit and debit card receipts must be truncated — that is, not show more than the last five digits of the card number, and not show the card’s expiration date.
[ad#cc.com-needhelpdeciding728x90]
Recurring billing
Transactions for which a cardholder grants permission to the merchant to periodically charge his account number for recurring goods or services.
Redlining
The illegal practice of giving differential treatment in lending, housing, insurance and other services based on the customer’s race. Decades ago, lenders were said to draw a red line around an area or community marked for differential treatment, hence the term redlining.
Reference number
Number assigned to each monetary transaction in a descriptive billing system. Each reference number is printed on the monthly statement to aid in retrieval of the document, should it be questioned by the cardholder.
Refund
The creation of a credit to a cardholder account, usually as a result of a product return or to correct an error.
Regulation DD
A law that requires depository institutions — such as banks, thrifts and savings and loan associations — to disclose any fees, interest rates or other charges assessed to deposit accounts. This includes any overdraft or other fees associated with transactions processed through debit cards linked to savings accounts. Also called the Truth in Savings Act or the FDIC Improvement Act of 1991.
[ad#adbrite728x90]
Regulation X
Regulation X is a Federal Reserve Board rule governing limits on the amount of credit that can be granted to purchasers of securities from securities brokers, dealers, banks and other lending institutions.
Regulation Z
Under Regulation Z, credit card issuers are required to disclose the terms and conditions to potential and existing cardholders at the point of account opening and at regular intervals. Upon soliciting and opening new credit card accounts, credit card issuers must generally disclose key information relevant to the costs of using the card, including the applicable interest rate that will be assessed on any outstanding balances and several key fees or other charges that may apply, such as the fee for making a late payment. In addition, issuers must provide consumers with an initial disclosure statement, which is usually a component of the issuer’s cardholder agreement, before the first transaction is made with a card. The agreement is the governing document for the account and provides more comprehensive information about a card’s terms and conditions than would be provided as part of the application or a solicitation letter.
Reloadable card
A reloadable card is often called a prepaid credit card, prepaid Visa card or prepaid MasterCard, but it also can be reloaded with monetary value multiple times. It does not necessarily have to be associated with a bank account run by the owner of the card. They usually carry multiple fees, charged for purchase of the card, for use of the card and for reloading the card.
Residual interest
[ad#1own(babies)125x125]
Residual interest is the amount of interest that accrues between when a credit card bill is sent, and when payment is received. It applies only when you carry a balance on your credit card. Consumer advocates call it an unfair practice because unless you call your issuer and ask exactly how much it will cost to pay your bill in full on the date you expect your payment to arrive, you’ll still owe interest on your next bill, regardless of whether you make any more purchases with your card.
Retail merchant
A merchant that provides goods and/or services in the retail industry, but that is not a mail/phone merchant, a recurring services merchant or a travel and entertainment (T&E) merchant.
Revolver
A revolver is a credit card issuer term for customers who carry balances, paying off those balances over time, thus “revolving” them. Someone who pays their credit card balance each month is not a revolver.
Revolving line of credit
A revolving line of credit refers to a bank or merchant offering a certain amount of always available credit to an individual or corporation for an undetermined amount of time. The debt is repaid periodically and can be borrowed again once it is repaid. Borrowing using a credit card is an example of using a revolving line of credit.
Reward card
[ad#cc.com-Creditcardair-travelrewards-728x90]
A credit card carrying an incentive or “reward” for use, typically involving cash back, merchandise points or frequent flier points. Many different reward schemes have evolved to encourage particular uses (such as grocery or dining purchases, or travel). See Tiered reward cards.
RFID
Radio frequency identification (RFID) technology is increasingly used in everything from library books to keyfobs that let office workers in their buildings to credit cards. They transmit very short range radio signals that a receiving device reads before it decides whether to let you check out a book, get to your cubicle or pay for that vente Cinnamon Dolce Frappuccino.
Roll rate
In the credit card industry, the “roll rate” is the rate at which 30-day delinquencies “roll” to become 60-day and then 90+ day delinquencies. For example, industry figures show that about one in five people who are 30 days become 60 days late, for a roll rate of 20 percent.
Sales draft
A paper record that evidences the purchase of goods or services by a cardholder.
Savings and loan association
A savings and loan association is a financial institution whose main purpose is to take in deposits and fund mortgages, as famously depicted in the 1946 movie “It’s a Wonderful Life.” However, savings and loan associations may also issue credit cards. Savings and loan associations, also known as thrifts, are regulated by the Office of Thrift Supervision, a division of the U.S. Treasury.
[ad#bidvertiser728x90]
Savings bank
While their chief purpose is to encourage thrift by paying interest dividends on savings, savings banks can also issue credit cards. A savings bank can be chartered at the state or the federal level. State savings banks are regulated by the banking agency of the state where it is headquartered; federal savings banks are regulated by the federal Office of Thrift Supervision.
Schumer Box
The Schumer Box is named for the then-chairman of the Senate Banking Committee that passed landmark consumer protection legislation, Sen. Charles Schumer. This standardized disclosure “box” features relatively consistent terms and conditions for credit card offers, which allows consumers to compare cards in a consistent way. Specific terms and conditions such as purchase and cash advance interest rates, annual fees and rate calculation methods are required to be spelled out for consumers in conjunction with all new account solicitations.
Secured credit cards
Secured credit cards are those that require collateral (property, such as a house, car or deposit of money) for approval. Generally, secured credit cards are designed for people with no credit or poor credit who are trying to build or rebuild their credit history.
Service charge
“Service charge” is a broad term that encompasses a variety of charges for services provided by a credit card company.
[ad#cc.com-needhelpdeciding728x90]
Settlement
The reporting of settlement amounts owed by one member to another, or to a card issuing concern, as a result of clearing. Settlement is the actual buying and selling of transactions among the merchants, processors and acquirers, along with the card-issuing entities.
Settlement bank
A settlement bank is an institution authorized to execute settlement on the credit card payment processing system on behalf of the member or the member’s bank.
Setup fee
A credit card setup fee is a one-time fee charged by a credit card company when a new credit card account is opened. Credit cards for people with bad credit are generally the only type that have a setup fee.
Signature strip
A signature strip is an area on the back of a card coated with a white or gray material that holds ink. Imprinted above it are words to the effect of “Authorized signature, Not valid unless signed.” Some people write “Show ID” in place of their signature, in an effort to discourage unauthorized use. While that may work in practice, merchants are not supposed to accept such cards.
Skimming
Skimming is a method of stealing credit card information by using a small, handheld electronic device that scans and stores card data from the magnetic strip. It can be done manually by a corrupt employee while out of sight (usually at restaurants or bars) or by criminals who place a skimming device on top of a regular credit card reader (usually at gas stations or ATMs machines) and retrieve it later. The stolen credit card information can be used to make fraudulent purchases online or for cloning.
Smart card
A smart card is a plastic card containing a computer chip with memory capabilities. Smart cards may be used for identification or to store information, financial amounts or other forms of data. Also called an integrated circuit card or a chip card.
Soft inquiry
The term used to describe a credit report check that does not impact the borrower’s credit score. Also known as a “soft pull.”
Soft pull
The term used to describe a credit report check that does not impact the borrower’s credit score. Also known as a “soft inquiry.”
[ad#bidvertiser728x90]
Standard APR
This APR comes into effect after the introductory period expires. A single credit card will have several APRs, applicable to different types of transactions — purchases, cash advances and balance transfers.
Standard floor limit
A floor limit that varies by merchant type. This refers to a currency limit on transactions, above which authorization requests are required.
State bank
When banks form, they can choose to be incorporated as state-chartered or as a national bank. A state bank is chartered and regulated by a state’s banking regulator and the Federal Deposit Insurance Corporation (FDIC). State banks, like nationally chartered banks, may issue credit cards.
Statement
A written record prepared by a financial institution, usually once a month, listing all transactions for an account, including deposits, withdrawals, checks, electronic transfers, fees and other charges, and interest credited or earned. The statement is usually mailed to the customer (also known as a billing statement).
Stoozing
(1) Stoozing, also called arbitrage, is the practice of taking a free or low interest loan from a credit card company, depositing it in a high-yield savings account, making the minimum payments on the card and pocketing the difference. Consumers who practice stoozing make money on the interest rate spread between money received and money paid — just like a bank.
(2) Stoozing, also called arbitrage, is the practice of taking a free or low interest loan from a credit card company, depositing it in a high-yield savings account, making the minimum payments on the card and pocketing the difference. Consumers who practice stoozing make money on the interest rate spread between money received and money paid — just like a bank.
Stored-value card
A stored-value card is a credit-card-sized device that is implanted with a computer chip with stored money value. A reloadable stored-value card can be reused by transferring a dollar value to it from an automated teller machine or other device. A disposable card cannot be reloaded.
Subprime credit card
A credit card designed for those with little credit history or bad credit. These types of bad -credit credit cards typically carry higher fees and interest rates to offset the increased risk involved with subprime lending.
[ad#bidvertiser728x90]
Teaser rate
Also called the introductory rate, the teaser rate is the annual percentage rate charged by the credit card issuer during an initial period, usually lasting a few months to a year. It is followed by a higher, “go-to” rate.
Terms and conditions
Terms and conditions is the common name for the document in which credit card issuers describe in detail their practices. After a consumer applies for a credit card and receives it in the mail, the first use of the card turns the terms and conditions into a legal contract.
Thin file
“Thin file” is a term used in the credit scoring world to describe a brief credit history. Traditionally, credit bureaus would not lend to people with thin files because they displayed too little experience in handling loans. However, more credit bureaus are considering alternate data — such as the history of utility payments or rent — in making lending decisions.
Thrift
A thrift is a financial institution whose main purpose is to take in deposits and fund mortgages, as famously depicted in the 1946 movie “It’s a Wonderful Life.” However, thrifts may also issue credit cards. Thrifts, also known as savings and loan associations, are regulated by the Office of Thrift Supervision, a division of the U.S. Treasury.
Tiered rewards
A tiered reward is a rewards earning calculation that is typically disclosed as “up to” a certain percentage cash back. As card users spend more, they increase the percentage of their rewards, up to a maximum. For example, a tiered reward offer could involve 0.25 percent for the first $1,000 in spending, 0.5 percent for the next $1,000 and 1 percent for all spending over $2,000.
Time-barred debt
Time-barred debt is a term that describes a particular type of old, unpaid debt. Every state has a statute of limitations that limits how long a creditor can get a court judgment forcing payment. For credit card debt, states’ statutes set limits of three to 10 years. Debt older than that is “time-barred debt.”
Total finance charge
Total finance charge is the amount that a consumer pays for credit card borrowing. The total finance charge is calculated in several ways, most commonly by multiplying the average daily balance by the daily periodic rate by the total number of days in the billing cycle. The charge is applied to credit card bills monthly.
Tranche
A tranche is a portion of a securitized credit card portfolio. Tranches are typically organized into classes based on risk (i.e. Class A, Class B, etc.) Investors buy portions of a securities portfolio and are paid based on the hierarchy of tranches.
Transaction
(1) Any agreement between two or more parties that establishes a legal obligation. (2) The act of carrying out such an obligation. (3) All activities affecting a deposit account that are performed at the request of the account holder. (4) All events that cause some change in the assets, liabilities or net worth of a business. (5) An action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.
[ad#adbrite728x90]
Transaction identifier
A transaction identifier is a unique 15-character value that Visa assigns to each transaction and returns to the acquirer in the authorization response. Visa uses this value to maintain an audit trail throughout the life cycle of the transaction and all related transactions, such as reversals, adjustments, confirmations and charge-backs.
Transactor
In the credit card world, a transactor is a cardholder who transacts — that is, makes purchases with a credit card — but does not carry a balance.
Truncation
The habit of merchants to display only some digits of a customer’s credit card number on a sales draft or receipt, in order to provide better security while still enabling identification (for the cardholder) of the card used. Truncation has been required by federal law since 2006. By law, no more than the last five digits of a debit or credit card may be shown on a receipt.
Truth in Lending Act
(1) The Truth in Lending Act (TILA) is the primary federal law governing the extension of consumer credit by lenders in the United States. Congress instituted the the Truth in Lending Act in 1968 to ensure more accurate disclosure of credit terms so that consumers could compare the various credit terms available in the credit marketplace, to avoid the uninformed use of credit, and to protect themselves against inaccurate and unfair credit billing and credit card practices. The regulation that implements TILA’s requirements is Regulation Z, which is administered by the Federal Reserve. Under Regulation Z, card issuers are required to disclose the terms and conditions to potential and existing cardholders at various times.
(2) The Truth in Lending Act is a federal law designed to protect consumers by requiring lenders to disclose, in a consistent way, the terms of loans.. The act requires a credit card issue to be transparent about the card’s terms. It also provides a means to dispute charges. The act was signed into law in 1968; an important addition regulating credit card lending, Regulation Z, was added in 1969.
Truth in Savings Act
A law that requires depository institutions — such as banks, thrifts and savings and loan associations — to disclose any fees, interest rates or other charges assessed to deposit accounts. This includes any fees associated with transactions processed through debit cards linked to savings accounts. Also called the FDIC Improvement Act of 1991 and Regulation DD.
Two-cycle billing
Two-cycle billing is the balance computation method used by some issuers that allows them to apply interest charges to two full cycles of card balances, rather than the most recent billing cycle’s balances. Two-cycle billing effectively eliminates the grace period for people who paid off a balance in the previous month. Two-cycle was heavily criticized by consumers and federal regulators banned the practice, beginning in July 2010. Also called double-cycle billing.
Universal default
Universal default is a common practice among credit card issuers that allows them to increase cardholders’ interest rates for any change in risk profile with any lender. Under universal default, credit cardholders who fail to make timely payments to other creditors — such as other credit card issuers, utilities, car lenders, landlords or mortgage lenders — can see their rates raised by other creditors, even if they were never late in paying those other creditors.
[ad#bidvertiser728x90]
Unsecured credit cards
Unsecured credit cards are the most common type of credit cards. They are not secured by collateral. That means that unlike secured loans, such as mortgages or auto loans, unsecured credit cards are not directly connected to property that a lender can seize of the cardholder fails to pay. Issuers of unsecured cards must make use of other means — such as the courts or garnishment — to collect unpaid debts. Customers qualify for unsecured cards based on their credit history, their financial strength and their earnings potential.
User authentication
User authentication is the process of validating a credit card user’s identity or authorized user status. User authentication is an important part of a merchant’s duties in accepting credit card, although in practice, authentication has in recent years become often cursory or nonexistent.
Usury
The lending of money at exorbitant interest rates. Many states have usury laws that cap interest rates, but a 1978 Supreme Court rulings allowed credit cards or other lenders to ignore those laws if the lender is headquartered in a state that does not have them. Most major card issuers have located their headquarters in states with no usury laws, and hence there is no cap on most credit cards’ interest rates.
[ad#adbrite728x90]
Utilization ratio
Utilization ratio is used in the calculation of credit scores. It compares the amount of credit being used to the total credit available to the borrower. Having a low ratio — in other words, not much debt but a lot of available credit — is good for your credit score. Also known as a balance-to-limit ratio.
Validation code
A unique four-character value that VISA includes as part of the CPS/ATM program in each authorization response. This code ensures that key authorization fields are preserved in the clearing or settlement record.
Vantage Score
A credit score product launched in March 2006 by the three major credit bureaus (Equifax, Experian and TransUnion) as a competitor product to Fair Isaac’s FICO Score. Like FICO, VantageScore is a three digit numeric value that assesses a borrower’s credit risk. VantageScores range from 501 to 990, with a higher score representing a lower risk to the creditor.
Variable interest rate
With variable-rate cards, the APR changes when interest rates or other economic indicators change. Also known as a floating rate.
Visa
Visa U.S.A. is one of the nation’s leading processors of credit and debit transactions via its payments network. VISA links more than 13,300 financial institutions, 6.9 million merchant acceptance locations and 520 million cards.
Visa card
A card that bears the Visa symbol and which enables a Visa cardholder to obtain goods, services or cash from a Visa merchant or acquirer, and have the transaction processed through its network. Visa does not itself issue credit or debit cards, but partners with card-issuing financial institutions.
Visa issuer
A financial institution that partners with Visa to issue credit and/or debit cards.
Visa merchant
[ad#cc.com-0%-150x150]
A merchant that displays the Visa symbol and accepts all Visa cards.
Voice authorization
An approval response that is obtained through interactive communication between an issuer and an acquirer, their authorizing processors or stand-in processing or through telephone, facsimile or telex communications.
Void
A void nullifies a transaction that has been recorded for settlement, but has not yet been settled. This removes the transaction from the batch of transactions to be settled.
Void transaction
A deletion of the transaction information.
Wage garnishment
Wage garnishment is a court-ordered technique of debt collection in which a debtor’s paycheck is deducted a set amount and paid to a creditor or a court until the debt is paid in full.
Wall Street Journal prime rate
The Wall Street Journal prime rate is the most common measure of the prime rate, which is an index 3 percentage points above the federal funds rate set by the Federal Reserve. To get the rate, the Wall Street Journal surveys the nation’s 30 largest banks on their prime rates and publishes it in their print edition. Credit card issuers often peg their variable-rate cards’ interest rates to the prime rate, plus a margin that varies according to how risky the issuer views a consumer.
X (Regulation X)
Regulation X is a Federal Reserve Board rule governing limits on the amount of credit that can be granted to purchasers of securities from securities brokers, dealers, banks and other lending institutions.
Yield on earning assets
Yield on earning assets is one measure of a financial industry’s solvency used by banking regulators. It looks at total interest, dividend and fee income earned on loans and investments as a percentage of average earning assets.
[ad#bidvertiser728x90]
Z (Regulation)
(1) Regulation Z is the section of Federal Reserve code that sets the rules for credit card issuers in how they present information about credit cards to consumers.
(2) Regulation Z implements the U.S. Truth in Lending Act (TILA). Under Regulation Z, credit card issuers are required to disclose the terms and conditions to potential and existing cardholders at the point of account opening and at regular intervals.
Z score
(1) The Z score is a corporate bankruptcy-prediction model introduced by New York University professor Edward Altman in 1968. The Z score formula assigns values to five financial ratios to assess the likelihood of bankruptcy for industrial and manufacturing companies.
(2) The Z score is a a bankruptcy-prediction model introduced by New York University professor Edward Altman in 1968. The Z score’s formula assigns values to five financial ratios to gauge how likely it is that a manufacturing or industrial firm will go bankrupt.
Zero balance
[ad#cc.com-0%-150x150]
Zero balance is to have no debt on your credit card. Depending on how long you’ve had the credit card, how many accounts you have and the size of your credit limit, canceling the card due to a zero balance could hurt your credit score because you might lose some credit history from your credit report, and your debt if the credit reporting agency purges its records. However, if you continue to use credit cards wisely by showing consistent payments, the credit score damage from closing a zero balance card is small and brief.
Zip-zap machine
A zip-zap is a manual credit card impression machine that creates multiple receipts by sliding a handle to record the raised numbers on the front of a credit card onto carbon-paper packet copies. The credit card is placed on the bottom of the machine and the carbon receipts on top. The user then slides the handle across the machine and back to make the impression.
Zombie debt
Zombie debt is old credit card and other debts that are beyond the statute of limitations, so a debt collector cannot successfully use the courts to collect them. Although these debts no longer have the courts as an avenue of collection, there’s nothing to prevent debt collectors from asking consumers to pay them. In recent years, the debt collection industry has expanded, creating more agencies and lengthier efforts to collect. So from the consumer’s perspective, debts don’t die, they rise to live on and on. Like zombies.
[ad#bidvertiser728x90]