Glossary

A

Access checks
Checks used to pay merchants or obtain cash advances from your credit card account.
Adjusted Balance Method
The method of calculating your account balance in which the credit card company subtracts payments made during the month.
Annual Fee
A fee charged to your account each year for the use of the card.
APR
Annual Percentage Rate. The yearly percentage rate of interest that is applied to any outstanding balance.
Average Daily Balance Method
Method of calculating your account balance to determine the proper balance amount to which the finance charge applies. It results in a balance that is the average daily balance over the billing period.

B

Balance transfer
Transferring a balance from one credit card to another credit card. This may be done to take advantage of lower interest rates or consolidate credit card debts.

C

Cash advance
Using your credit card to obtain cash from an ATM or bank withdrawal.
Credit limit
How much total credit or money you have available through your card.

E

Ending Balance Method
Method of calculating your account balance to determine the proper balance amount to which the finance charge applies. It applies the finance charge to the balance existing at the end of the billing period.

F

Finance Charge
The dollar amount of fees from transactions (e.g. cash advance fee) and the interest applied to your account each billing period.
Fixed rate
An APR that is not tied to a publicly available interest rate and generally stays the same unless the credit card company notifies you of the change or certain circumstances identified in your cardholder agreement trigger a change.
Foreign transactions
Using your credit card outside of the United States. These transactions are often charged an additional fee.

G

Grace period
The period during which no interest accrues on your balance and you can pay off your balance without incurring a finance charge. Typically from 10-30 days depending on the credit card company.

O

Over the limit
When your charges to the account have gone over the credit limit established by the credit card company.

P

PIN (Personal Identification Number)
The number used to verify the user of the card. You may be given this number to use your card for cash advances at ATMs, or to verify your identity on the telephone or online.
Previous Balance Method
Method of calculating your account balance to determine the proper balance amount to which the finance charge applies. It applies the finance charge to the balance existing at the beginning of the billing period.

V

Variable rate
An APR that is tied to a changing published rate such as those published by the Wall Street Journal. When the published rate changes, your APR may change also.