account number:
A number assigned to a customer by a financial organization. This number is often listed on the front of a credit card. If you use a credit card when purchasing goods or services online or over the phone, often only the account number is required. It is very important to keep your account number private, so that other people do not make purchases using your account!

annual fee:
A yearly amount some credit card companies charge customers for use of their credit cards. It is billed to customers on their statement. Not all credit cards have annual fees.

application fee:
A flat fee that must be paid when applying for certain credit cards.

Abbreviation for Annual Percentage Rate. The APR is basically the cost of credit, or how much you must pay to get a loan, on a yearly basis. The APR is expressed as a percentage, and it reflects the interest rate, as well other fees and charges. APRs can vary widely from one credit card to another.

Your credit card balance is the amount of money you owe for purchases or other transactions made with the credit card, and also includes any interest charges, late fees, or other fees (such as annual fees) associated with your account. Your credit card balance is your credit card debt.

balance transfer:
Moving unpaid credit card balance, or debt, from one credit card account to another. Some credit card customers transfer their balances to new accounts to lower their interest rates or payments.

cardholder agreement:
A written document that outlines the terms, conditions, and "rules" that apply to use of a credit card. When you get a credit card, you agree to these conditions and rules. The cardholder agreement describes interest rates, finance charges, and the way a particular card "works."

cash advance:
An instant loan of cash from a credit card company. Many credit cards allow you to get cash advances from ATMs. The interest rate for cash advances is often higher than the rate for purchases, and there is often no associated grace period. Like any loan, the cash advance must be repaid.

cash advance fee:
The amount of money a credit card company charges customers who use their credit cards for cash advances. This fee is in addition to the interest that must be repaid on the cash advance.

A loan of money that is given to a borrower for a specified amount and a specified period of time.

credit card:
A plastic card with an assigned account number, which enables the holder to purchase goods or services and/or receive cash on credit.

credit limit:
The maximum amount of money that can be charged to a credit card.

credit history:
A profile or report of a person's debt and repayment habits. Financial organizations will review your credit history when deciding whether to extend loans or credit to you. Your credit history is built up over the course of several years, so be careful. . .your borrowing and paying habits now will follow you for a long time!

credit rating:
A score assigned to person's credit history and past ability to pay back debts. Financial organizations, real estate brokers, and even some employers use your credit rating to determine whether or not you are financially responsible. Your credit rating can impact your eligibility for future loans, your ability to rent or own a home, and even your employment prospects.

The amount of money owed. Whenever you use a credit card, you create debt. The money you borrow through the credit card has to be repaid.

A situation which occurs when a credit card user cannot or will not meet their financial obligations. Defaulting on your credit card can cause your credit rating to suffer, which can have serious negative consequences in the long-term.

finance charges:
The costs associated with using a credit card. The finance charges are made up of interest costs and other fees.

grace period:
A period of time a credit card company will provide interest-free between the date of a purchase and the billing date. If you repay your entire balance during the grace period, you do not have to pay interest or finance charges. If you carry a balance from month to month, you do not get a grace period. Some credit cards do not provide grace periods.

introductory APR:
A low rate offered by credit card companies to customers for a given period of time to encourage customers to agree to their credit terms. After the introductory rate expires, customers must pay a higher rate.

The cost of borrowing money, often calculated as a percentage of the total amount borrowed. When making purchases with a credit card, interest must be paid on top of the total purchase price of an item if it is not paid off in full during the grace period. The longer you take to pay off a credit card purchase, the more interest you pay.

late fee:
An amount of money charged by credit card companies to customers who do not make payments on time. Too many late payments can cause your credit rating to suffer.

minimum payment:
The smallest amount of payment required by a credit card company, often on a monthly basis. If a credit card user does not make the minimum payment, the account can go into default. Many minimum payments are calculated based on a percentage of the total balance.

Abbreviation for Personal Identification Number. A PIN is usually different from the account number on a credit card. It is a secret number used to confirm the user's identity. Credit card users often must use their PIN when getting cash advances.

A slang term used to refer to credit cards, as in when someone says, "I bought it with plastic."

If a customer is "pre-approved" for a credit card, it means that the customer has passed a preliminary credit screening, and may be able to open a credit card account. The words "pre-approved" often appear on credit card offers to entice potential customers.

Prizes or gifts offered for "free" to encourage new customers to get a credit card. Credit card companies that recruit young people often give away premiums when people apply for their cards.

rewards, or rewards points:
Benefits, prizes, or other incentives offered by financial organizations to encourage people to use their credit cards. A credit card customer might get a "point" for each dollar he/she charges to a credit card. The "points" can later be redeemed for products or services, such as airline tickets.

A written record from a credit card lender that lists and describes all of the activity associated with a credit card account during a given period of time. A monthly statement lists purchases, payments, cash advances, interest and finance charges, and minimum payments due. Statements are either mailed to credit card customers or accessed online.