ARE YOU ON GOOD “TERMS” WITH YOUR CREDIT?

 

 

(June 18, 2001 – Wilmington, DE) – Have you ever wondered what all of those credit card terms really mean?  With the following list compiled by First USA, the nation’s largest VISA^® issuer, you have a personal guide to lead you through the ABCs of credit card lingo:

 

Affinity Card  :  A credit card affiliated with an organization, such as a charity or alumni association, that receives a percentage of all transactions charged to each account.

 

Annual Fee :  Yearly cost of owning a credit card.  Many credit card companies offer cards with no annual fee.

 

Annual Percentage Rate (APR) :  The amount of interest charged on a yearly basis.

 

ATM:  Automated Teller Machine through which you can access your checking or savings account with your ATM, debit, credit or check card.

 

Available Credit  :  Amount of additional charges you can make on your account, calculated by subtracting current charges, pending charges and outstanding balances from your credit limit.

 

Average Daily Balance  :  The average of all of the ending balances of each day during a billing cycle.

 

Balance Transfer  :  The process of paying off another creditor’s account with the use of a convenience or balance transfer check or electronic payment transfer.

 

Bankruptcy  :  The legal statement of insolvency.  This prevents foreclosures and repossessions but does not resolve a bad credit report – it will be included on credit  report for up to 10 years.

 

Cash Advances  :  Money borrowed against a charge or credit card, which accrues interest differently than charged purchases, sometimes at a higher rate and without a grace period.

 

Charge Card  :  A card on which purchases can be made now and paid for later.  Note, balances must be paid in full each month.

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Check Card  :  Also known as a debit card, this enhanced ATM card gives you access to your checking and savings account and allows you to purchase items.  The check card provides convenience and reduces the need for carrying cash.  It also provides a record of your transactions to help track of where you spent your money.

 

Co-Branded Card  :  Also known as a rebate card, this credit card is affiliated with an organization, such as an airline or sports team.  It allows the cardholder to accumulate points or rebates with every purchase.

 

Credit Card  :  Allows consumers to purchase goods and services against their line of credit and pay for them later.  A student credit card gives consumers the option to pay the outstanding balance each month or to pay over time.

 

Credit Line  :  Also known as credit limit, this is the maximum amount that you can charge on your credit card.

 

Credit Report  :  A report maintained by a consumer-reporting agency that records your credit card and other loan product credit lines, balances owed, payment patterns and other credit-related history.  You can order a copy of your credit report from Experian, Equifax or Trans Union.

 

Credit Score  :  A fast, objective way to evaluate a credit report, which is used to predict how likely an individual is to repay a new loan.

 

Debit Card  :  Also known as a check card, this enhanced ATM card gives you access to your checking and savings account through ATMs and merchant purchases.  The debit card provides convenience and reduces the need for carrying cash.  Its record of your transactions helps you keep track of where you spent your money.

 

Equal Opportunity Credit Act  :  Federal law that prohibits lenders from discriminating on any prohibited basis including age, race, color, marital status, religion, sex, national origin, receipt of income from public assistance or having exercised any right under the Consumer Credit Protection Act.  It also grants applicants the right to know why credit is rejected.

 

Fair Credit Billing Act  :  Federal law that defines how to address credit card billing disputes and the processing of credit balance refunds.

 

Finance Charge  :  The costs associated with your credit card account including such charges as interest, service or membership fees, transaction fees, etc.

 

Gold and Platinum Cards  :  Credit cards that offer higher credit limits and exclusive benefits.  Issuers usually require cardholders to meet higher standards for income and credit history.

 

Grace Period  :  The period within which any credit extended for purchases may be repaid without incurring a finance charge – usually 20-25 days.

 

Interest Rate  :  The rate a lender charges for use of its funds.

 

Introductory Rate  :  Competitive interest rate offered to cardholders, usually for three to six months, before moving to the standard APR.

 

Issuer  :  A bank or financial institution that issues credit cards or charge cards.

 

Minimum Payment Due  :  The minimum amount you must pay, to keep your account current, if you are not paying your balance off in full (usually 2 to 3 percent of your average daily balance).

 

New Balance  :  The total of your previous balance plus any purchases, cash advances, fees or finance charges, less any payments or credits.

 

Payment Due Date  : The date on which your payment should be received (not postmarked).

 

Periodic Rate  :  The rate used to compute the finance charge(s) during the billing period.  More than one periodic rate may apply to purchases, balance transfers, promotional purchases and cash advance transactions.

 

Previous Balance  : The account balance outstanding at the beginning of the billing cycle.

 

Principal  :  The outstanding balance on a credit card or loan, excluding interest.

 

Secured Card  :  A credit card in which the credit limit is established by a deposit made by the cardholder.  The card works much like a normal credit card and helps cardholders to build or rebuild good credit.

 

Smart Card  :  A card that can store credit or debit card functions through an embedded electronic chip.  It allows cardholders a safe, secure and convenient way to customize products based on their preferences.

 

Statement Date  :  The closing date of the billing cycle for which your statement is issued.

 

Stored Value Card  :  This card is purchased for a specific dollar amount and charges are deducted from the balance as they are made.  Gift cards and Visa Buxx are examples of stored value cards.

 

Terms and Conditions  :  The contracted terms to which the customer agrees when accepting a credit card or charge card account, which detail both the consumer’s and creditor’s responsibilities.

 

Truth in Lending Act  :  Federal law requiring lenders to disclose information about the loan or credit card at time of offer, account opening and each billing statement.

 

 

First USA realizes the importance of educating students about the principles of money management.  As part of its outreach campaign, First USA has joined forces with popular university-bound high school grads Chris Barrett and Luke McCabe, known to millions as Chris and Luke, the "first corporately sponsored college students."  As "student ambassadors" for First USA, Chris and Luke will help spread the word about financial responsibility.  First USA's free informative brochure and CD-ROM (available by e-mailing studentcreditinfo@firstusa.com) provide a range of practical financial tools for students.  First USA's Student Advisory Board, launching this fall, will give college students across America the opportunity to speak for their peers as they share their thoughts on financial issues.  Also coming this fall, the First USA online reference site will give students an opportunity to learn more about money management.