Revolving Line of Credit: When an issuer, like a credit card issuer, offers a line of credit that’s always available, can be charged against, paid back, and still remains available, that’s a revolving line of credit.
Reward Card: A type of credit card that offers rewards for its use, like frequent flyer miles, merchant discounts, cash back payments and other perks.
Roll Rate: This is the rate at which one late payment turns into two, or two to three, etc. The rate of borrowers who are 30 days past due with a payment and who then become 60 days past due, for example, is called the roll rate.
Secured Card: This is a card issued to a person who has poor credit, or sometimes issued to those with no credit. These require some type of collateral against purchases made on the card. A deposit can be made or property can be offered for collateral. These cards can help people with poor credit reestablish their credit. Often, for a credit limit of $200, the person who wants the card has to make an advance deposit of $200, in case they default on the payments.
Standard APR: This is the annual percentage rate or interest rate that goes into effect after the introductory period with its lower APR has passed. Most cards will have several different APRs for different types of transactions.
Statement: Also known as the billing statement, this is a detailed listing of your account information and purchases, payments, finance charges and interest applied each billing cycle.
Subprime Credit Card: A card usually issued to someone with poor credit with a very high interest rate and higher finance charges to cover the risk of lending to someone with a poor credit history.
Terms and Conditions: This is the detailed listing of the credit card company’s practices that each person must read and understand. This becomes a legal binding contract when the borrower used the card for the first time.
Transaction: In layman’s terms, a transaction is anything that causes money to change hands, either literally or virtually, by placing debt onto a card or removing it from a card. A purchase is a transaction, and so is a balance transfer, a chargeback, and a cash advance.
Unsecured Credit Cards: Cards that don’t require collateral and are issued based on good credit history and a good financial record.
Utilization Ratio: Also known as the debt-to-credit ratio, this is a comparison of how much you owe against your total credit limit. The lower your ratio, the better your credit rating.
Variable Interest Rate: An interest rate or APR that changes with the economic state of the nation, like most interest rates. This is also known as a floating interest rate, floating APR or variable APR.
Wage Garnishment: When someone defaults on their credit card payments (or other debt), a court can order wage garnishment, which removes a set amount from your income each month to repay the debt.
Visa: One of the major global credit card brands.
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