Annual Percentage Rate (APR)

The annualized representation of your interest rate. On a credit card account, different balances may have different APRs, such as a Purchase APR or a Cash Advance APR.

Bankruptcy

A legal process that assists consumers and businesses in getting rid of their debts and repaying their creditors. If entitled, the bankruptcy court will protect you from certain actions, such as collection activity, during your bankruptcy proceeding. For consumers, the most common bankruptcies are Chapter 7 and Chapter 13.

Billing Statement

A written record from the issuer of your credit card that reflects your transactions, such as purchases, cash advances, interest charges, fees, credits and payments, and balance and payment information during a billing cycle. It also provides other detail, such as repayment periods and other disclosures. Typically, it is provided by the issuer once a month.

Cash Advance

A cash loan from a credit card account typically using an ATM, bank withdrawal, or a convenience check. There is usually a transaction fee charged by the issuer for a cash advance.

Charge-Off

An accounting term used to describe when an issuer determines that a credit card balance is no longer an asset, but a liability. Typically, credit card accounts are charged off when they become 180 days delinquent; however, accounts may be charged off for other reasons, such as for bankruptcy or fraud.

Credit Reporting Agencies

A company that compiles and maintains files on consumers and regularly engages in assembling or evaluating, and maintaining public record information and credit account information for the purpose of furnishing consumer reports to third parties bearing on consumers’ creditworthiness, credit standing, or credit capacity.

Debt to Income Ratio

It is the ratio of all personal debt, including credit card debt, to personal income. Many lenders consider a consumer’s debt-to-income ratio when evaluating them for credit.

Default

Typically, it is when a consumer fails to make their minimum payment by their payment due date. However, it may also include other conditions, such as going overlimit or bankruptcy. The issuer of your credit card will generally define default in the agreement that governs your account.

Grace Period

The time during which you are allowed to pay a balance on your credit card without having to pay interest. The CARD Act of 2009 requires that, if issuers provide a grace period, it must be at least 21 days. Many credit card issuers provide a grace period for the purchase balance, but do not provide a grace period for the cash advance balance.

Late Payment

When the issuer does not receive your minimum payment amount by the payment due date. Most issuers will charge a fee if a payment is late.

Minimum Payment

The lowest amount you are required to pay each month on your account. The issuer of your credit card will describe how they calculate the minimum payment amount in the agreement that governs your account.

Returned Payment

When your payment is returned unpaid by the financial institution on which it was drawn. Most issuers will charge a fee for a returned payment.