Unit 6: Credit Cards

revolving credit

Open line of credit that can be used for any purchases as long as you are under the limit and that's payments vary monthly based on size of the debt

co signer

Someone who legally agrees to take responsibility for a person's debt if they cannot repay it

balance transfer

The act of transferring debt from one credit card account to another, usually for a fee

interest

The amount you owe as the cost of borrowing money

credit limit

The maximum amount that may be borrowed on a credit card

grace period

The number of days between a borrower's statement date and when payment is due, often without accruing interest

joint account

A bank or credit account that is shared between two or more individuals which allows everyone named on the account to access the funds

credit card agreement

A contract that outlines the terms and conditions for using your credit card

cash back

A credit card benefit that pays the cardholder a small percentage of their net expenditures, often in cash, payment toward their balance, reward points, travel miles, or gift cards

cash advance

A credit card service that allows cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank, typically at a high interest rate or for a fee

late payment fee

A fee charged if your payment is received after the due date

penalty APR

A higher interest rate triggered by being late with or missing a credit card payment

statement

A monthly record of your account transactions provided by your credit card company electronically or on paper

authorized user

A person who has permission to use and/or carry another person's credit card, but isn't legally responsible for paying the bill

credit card

A plastic card that allows you to make purchases now with borrowed money, which then you must repay to the lender in one lump sum or in monthly payments with interest

schumer box

A standard table that legally must appear in a credit card agreement showing basic information about the card's rates and fees

secured credit card

A type of credit card that requires the borrower to pay the company a fixed, up-front amount of money as collateral, which becomes the credit limit of the card, thereby making it low-risk to the credit card company

annual fee

A yearly fee that may be charged for having a credit card, independent of how you use the card

interest rate

The rate charged for borrowing money usually expressed as a percent of the amount borrowed

minimum payment

The smallest amount of a credit card bill that a credit card holder must pay during a billing cycle to remain in good standing with the lender

introductory APR

The typically low rate charged during the introductory period after a credit account is opened, after which the regular, typically higher, APR will apply