Credit Basics

Transaction

Actual process of a purchase, whether it involves payment with cash or credit card or depositing or withdrawing money from an ATM.

Annual Percentage Rate (APR)

Annual rate charged for borrowing.

Hot Check

Check written on funds not actually in the checking account.

Authorization Code

Code which is sent from the credit card to the merchant who submitted the transaction as a form of its approval.

Liability

Debt which is your responsibility to pay.

Refund

Give back, especially money; return or repay, normally for the purchase price of a returned item.

Secured

Guaranteed by collateral.

Unsecured

Guaranteed only by a signature.

Hologram

Holograph; three-dimensional image of an object formed by a split laser beam, then illuminated either with a laser or ordinary light.

Finance Charge

Interest charged for charged made on a credit card or other type of loan.

Discount Rate

Interest rate charged by federal reserve banks on loan to their member banks.

Character

Involves paying bills on time.

Credit Limit

Maximum amount of money available to a credit cardholder for purchases on a single credit card.

Prime Rate

Minimum interest rate charged by a commercial bank on short-term loans to large, best-rates customers.

Consumer

Person who acquires goods or services for direct use or ownership, usually through purchasing with money.

Creditor

Person who has loaned money to someone on credit or through a loan.

Capacity

Personal income or earnings.

Collateral

Property accepted as security for a loan or other obligation.

Billing Cycle

Schedule of recurrent times in any regular systems of paying or sending bills.

Enticement

Something which attracts, especially with the promise of pleasure or rewards.

Merchant

Store or store owner.

Capital

Things one owns, for example, a car.

Capture

To enter data of a purchase into a credit card electronic system for processing and ultimate approval or decline.

Reconcile

To settle or resolve any differences between two sets of bookkeeping.

Federal Reserve Banks

Twelve regional banks which monitor and act as depositories for banks in a specific region.

Security Code

three- or four-digit code on the front or back of a credit or debit card which is an additional layer of security the merchant can use to verify the person using the card is the cardholder.