An affinity card is unique because it is offered in conjunction with a card issuer and a non-financial group such as a sports franchise, university, or non-profit organization. These types of affinity groups will offer special deals or discounts to entice consumers to use their credit cards.
Examples include the NHL-branded Discover it® credit cards.
A yearly fee that must be paid to own some credit cards. This fee is generally just added to the account balance.
APR (Annual Percentage Rate)
This is the percentage that will be applied to your balance every month and charged on the card as interest. Most terms and conditions list several APRs that could be offered to a consumer, and the exact APR given will depend on the consumer’s past credit history.
Balance Transfer APR (Annual Percentage Rate)
This is the percentage that will be applied as interest to any balance transfer you might make. This is usually the same as the Purchase APR, but not always.
Balance Transfer Fees
These fees are imposed when you transfer balances from one credit card to another. It may be a flat dollar amount or a percentage of the amount transferred.
A check digit is used for error detection on identification numbers when credit card numbers have been added manually.
This type of credit card is sponsored by an issuing bank and and a retail organization, such as a department store. A co-branded card may offer additional benefits such as discounts or free merchandise from the sponsoring retail organization.
A credit report is a personalized financial profile, featuring information about your past behavior with loans and credit cards. Credit issuers and other lenders use your credit reports to determine whether or not they want to do business with you, and under what terms.
A credit score is a numerical value based on an analysis of the personal financial information included in your credit report. This number indicates your credit worthiness and how risky you are as a potential borrower (the likelihood that you will be able to pay your debt obligations). Your credit score is based on the information in your credit report, but it’s not actually a part of your credit report.
CVV is an acronym for card verification value, the credit card security code that helps verify the legitimacy of a card. This code can be a three-digit or four-digit number, printed on either on the back of the card or the front (depending on the card issuer).
Debt consolidation is the combination of multiple loans into a new, single loan, which may offer a lower monthly interest rate and payment, or a longer repayment period. In terms of credit card debt, this often means a balance transfer from one or multiple high-interest cards to one lower interest card.
Deferred interest is interest that accumulates during a holding period but is not paid until a later redemption date.
This is a digital device or electronic software that allows you to make purchases. It can hold and work like the cards you already carry. You can have multiple accounts and information in one place instead of carrying multiple credit cards, debit cards, gift cards, etc., in your wallet.
EMV stands for Europay, MasterCard and Visa, a smart chip technology that uses embedded microprocessor chips in credit cards that store and protect cardholder data. You may have heard of this as Chip-and-PIN or Chip-and-Signature. To learn more about EMV Cards, visit our resource page.
A credit card company will give a forbearance to a cardholder to provide some form of temporary relief. Forbearance programs can include: postponing payments for an extended period of time; lowering minimum payment monthly payments; taking away certain fees; decreasing interest rates. It’s important to note that forbearance is not debt forgiveness.
Foreign Transaction Fee
A fee for a credit card transaction that is processed in foreign currency or in U.S. dollars that is processed outside of the United States.
Hard Credit Inquiry
This type of inquiry occurs when a financial institution such as a credit card issuer or lender checks your credit report to decide whether or not to lend you money. Hard inquiries typically occur when a consumer applies for a loan, credit card, or mortgage. They will lower your credit score and can remain on your report for up to two years. For more information on credit inquiries, check out our resource page.
Credit cards will commonly offer a low or zero-percent rate that switches after a set amount of time (usually 6-12 months) to a higher variable or fixed rate. Credit card issuers will often do this to attract customers.
Penalties are assessed when a credit card bill is not paid by the due date. If the credit card company does not receive a minimum payment by this date, late fees will be charged in accordance with the terms and conditions. There may also be fees charged if a consumer goes over their spending limit.
Some credit cards do not require any maintenance fees, but many charge annual fees that become a balance on the card. Other common fees include a setup charge and charges for additional cards.
This is the amount you can pay in order to keep your account from entering default. You may only be required to pay a minimum of two percent of the outstanding balance. However, you should always try to pay off your balance in full.
Credit card interest rates may be raised permanently when a consumer violates the terms of the contract. For example, late payments may trigger an APR that could be up to 10 percentage points higher than normal. The penalty APR will then be applied to all future balances.
Soft Credit Inquiry
Soft inquiries happen when a person or company checks your credit report as a background check, when you are “pre-approved” for certain credit card offers, and when you personally check your credit score. These inquiries are informational and are not directly connected to any credit decision. You can check your credit score as often as you want without it affecting your score.
This ratio is the percentage of your total credit card balance in relation to your credit limit on each of your credit cards, which is expressed as a percentage. This is a very important factor when it comes to calculating credit scores.