Glossary of Credit Card Terminologies

    Credit cards are used by people around the globe and are issued by several banks and financial institutions around the world. Despite the popularity of these plastic cards, not too many people are aware of the different terminologies associated with them. At times, people come across different terminologies on their statements or any other letters sent to them by the bank and find it difficult to understand the meaning of such terms. Here is a glossary of common credit card terminologies that you are most likely to come across as a cardholder.

    1. Annual Fee – It is a fee that you will need to pay on a yearly basis to access the services and facilities offered with your card. It is charged directly to your card account.
    2. APR – It stands for Annual Percentage Rate and refers to the annual interest rate charged on your credit card.
    3. Account Numbers – It is a system generates number that is unique and helps in the identification of your credit card account. It is also known as the credit card number and is printed on your card. You will need this number for making payments, authorizing transactions and for a variety of other reasons.
    4. Alerts – They are messages sent to your registered mobile number or email address and they notify you about transactions and other activities on your credit card account. They can help you to keep a track of your credit card expenses.
    5. ATM – It stands for Automatic Teller Machine and is the machine from which you can withdraw cash with the help of your debit and credit card. You will need to swipe or insert the card and enter the PIN for the particular card. You will then to able to withdraw an amount of your choice. The amount that you withdraw has to be within the available credit on your card.
    6. Adjusted Balance – After you make payments, the balance of your card is adjusted to reflect the payments made and so the new balance is known as the adjusted balance. When the balance is adjusted, you get access to more credit.
    7. Authentication – It is the process by which your information is verified by the bank. When you make payments online or when you access the phone banking service offered by your card issuer, you will need to provide your account information and other credit card details for authentication.
    8. Balance Transfer – Balance Transfer is the process by which the balance of a credit card is transferred to another credit card. You can transfer balances between credit cards offered by same or different banks.
    9. Bad Credit – It refers to bad credit score and can be one of the reasons why a person’s credit card application might be rejected by the bank.
    10. Billing Cycle – It is the period between statement dates and is mostly 28 to 31 days. The billing cycle may be different for different credit cards and it can also be changed by the cardholder.
    11. Business Card – It is a credit card that is offered to businessmen and corporations.
    12. Card Member – The individual who has been issued a credit card by the bank or financial institution.
    13. Card Issuer – The bank or financial institution who issues the credit card.
    14. Cash Advance – It is the process of withdrawing cash with the help of the credit card from an ATM or from the branch of a bank.
    15. Card Reader – It is a machine that is used to read the information encoded in the card.
    16. Cash Back – It is an amount that is credited back to the cardholder as a loyalty bonus.
    17. Credit bureau – It is an agency that creates a database of payment information of customers and rates them according to their payment behavior. The card issuers contact the credit bureau to collect information about applicants.
    18. Credit Limit – It is a limit set by issuer bank and is defined as the maximum amount that can be charged to your credit card account. The limit is set based on the credit history, annual income and financial profile of the cardholder.
    19. CVV - It is the 3-digit code that you find on the back of your credit card and is used for authentication purposes, especially when you are making payments for online purchases.
    20. Direct Debit – It is an automated process by which a fixed amount of money is debited from your credit card and is paid to another account, for paying utility bills, making installment payments, paying for purchases and so on. In most cases, you will need to submit a Direct Debit authorization form to avail this service.
    21. Expiry Period – It is the period till which the card will be valid. It is provided in the Month/Year format and is printed on the card. For example, if you find that Valid Period given in your card is 02/15 to 02/17, it means that your card will be valid till February, 2017.
    22. Expired Card – It refers to a card which has expired and is no longer valid. When the card expires, the bank is most likely to issue a new card to the cardholder.
    23. Encryption – It refers to the process by which your information is encrypted during online transactions, to avoid fraud.
    24. Fraud Transactions – Fraud or Fraudulent Transactions refer to transactions that have been completed with your credit card without your authorization. In most cases, you will not be liable for any such transactions completed with your card.
    25. Funds Transfer – Same as Balance Transfer.
    26. Fee for Cash Advances – It is the fee charged for withdrawing cash with your credit card i.e. fee charged for availing the cash advance facility.
    27. Finance Charges – They refer to the interest and other charges levied on the credit card and they help in determining your total cost of using the card.
    28. FAQ - FAQ stands for frequently asked questions and identifies common questions that cardholders ask the Customer Service Team of the bank.
    29. Grace Period – It is the interest free period offered by the card issuer and if you pay your card balance in full within this period, you will not have to pay any interest.
    30. Interest Rate – It is the rate at which you will need to pay interest for your credit card balances.
    31. Magnetic strip – It is a magnetic band present on the back of credit cards and stores information about the cardholder. It is read by the POS terminals and card readers for processing transactions.
    32. Minimum Amount Due - It is the minimum amount to be paid for the purchases concluded in a given month. The minimum payment required is usually 3% of the balance and is always indicated on the credit card statement. You can always decide to pay more than the minimum due but you cannot pay less than that, if you want to keep using your credit card.
    33. Online Banking – Most credit card issuers provide you with the ability to access your bank account through the online banking service. By subscribing to this free service, you will be able to view online all the transactions completed in a month and all statements for the last 12 months. You will be provided with a user ID and password to access this facility.
    34. Online Transaction – It refers to any transaction completed with your credit card on the Internet, mainly on ecommerce sites and to pay for other services online.
    35. Payment Due Date – It is the date by you which will have to pay the debit balance shown in the last statement. You will not have to pay the balance in full and instead you can decide to pay the minimum amount due that is shown in the statement.
    36. Phishing - Phishing is a computer fraud carried out through social engineering techniques and it amounts to identity theft and stealing personal information of an individual. It is accomplished by sending email with counterfeit graphics and official logos and by urging the cardholders to share sensitive information such as user name, PIN or even the credit card number.
    37. Password – It refers to the alphanumeric code that you will need to provide for accessing different types of services offered by the card issuer bank, such as phone banking and online banking services. You will be first provided with a generic password and then you will be able to create your own password.
    38. PIN - The PIN (Personal Identification Number) is your secret and personal code consisting of four digits. The PIN is mainly used to withdraw cash at the ATM but for CHIP cards, it is also used for making payments for purchases at POS terminals.

    Apart from the above, there are many other terms that you might come across when using a credit card. In case you are not sure about what a particular term means, you can always contact the bank and get clarification about the same.

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