Credit Card Glossary - C

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Card Holder Agreement

Required by the Federal Reserve. It is a written statement that gives the terms and conditions of a card account. It must include the annual fee, formula for minimum payment, Annual Percentage Rate and cardholder's rights in billing disputes

Cash Advance Fee

Credit cards give a cash advance limit to obtain cash but this comes with a fee. The checks that come attached to your monthly statement are also a cash advance. The fee can be a per-transaction fee or a percentage of the cash advance. The cash advance fee is costly because there is no grace period and the interest accrues as soon as the money is withdrawn. Usually 2-5% of the money advanced.

Cash Cards

Cards with a pre-established value. Read by a special cash card reader. The card is drawn down until the value is zero. Beware that these are like cash with no built in security if they are lost are stolen.

Caveat

A warning or caution.

Caveat Emptor

Latin for "let the buyer beware." It means that the buyer of a property or item buys it at his or her risk.

Cash Rebates

This credit card allows the user to earn cash "rewards" with each purchase. Companies make money not only through annual fees and finance charges but also from each purchase you make. They typically receive between 1-3% of your purchase. A cash rebate will return some of that fee to your pocket.

Chapter 7 Bankruptcy

Gets rid of all debts except some taxes and possibly alimony payments. Liquidates all assets that are not exempt (cars, work-related tools and basic household furnishings). Some property may be sold by a court appointed official or turned over to creditors.

Chapter 11

A reorganization bankruptcy, usually involving a corporation or partnership. (A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in Chapter 11.)

Chapter 12

Chapter of the Bankruptcy Code designed to give special relief to a family farmer with regular income.

Chapter 13 Bankruptcy

Allows a borrower with a stable income and limited debt, to pay off bills under a court approved repayment plan over a 36 to 60 month period rather than surrender any property.

Charge Card

A charge card is a means of obtaining a very short term (usually around 1 month) loan for a purchase. It is similar to a credit card, except that the contract with the card issuer requires that the cardholder must each month pay charges made to it in full -- there is no "minimum payment" other than the full balance. Since there is no loan, there is no official interest. A partial payment (or no payment) results in a severe late fee (as much as 5% of the balance) and the possible restriction of future transactions or even cancellation of the card.

In contrast, a credit card is a revolving credit instrument which does not need to be paid off in full; no late fee is charged as long as the minimum payment is made, which carries a balance forward as a loan charging interest. Many people are not aware of this distinction however, and often the two terms are used interchangeably to describe any card which can be used as payment.

Charge Off

Term used to indicate that a creditor does not expect a debt to be paid and is listing it as such. This does not mean that the debt no longer exists or that there will not be further attempts to collect it.

Closed-Account Fee

Fee for shutting down an account. Possibly charged if the account is closed before a minimum amount of time has passed.

Co-branded Cards

Credit card issued in partnership between a bank and another retail company. Similar to an affinity card. Many departments offer co-branded cards with special deals or discounts on purchases at their store. Co-branded cards often come with a large annual fee.

Co-Signer

A joint signer of a credit card application with the principal applicant. Should the principal applicant default on what he owes, the co-singer is responsible for paying the balance due.

Commercial Bank

A financial institution that provides a broad range of services, from checking and savings accounts to business loans and credit cards.

Comptroller of the Currency

An officer of the Treasury Department who is responsible for chartering national banks and has primary supervisory authority over them.

Consumer Credit

Loans for personal or household use as opposed to business or commercial lending.

Consumer Credit Counseling Service

Service that analyzes consumer debt and spending. Provides counseling and a plan to work out an achievable budget and debt repayment plan and work with creditors. Helps the consumer pay back debts over time.

Consumer Credit Protection Act

The Consumer Credit Protection Act, passed in 1968, for the first time spelled out basic consumer protections, including Truth in Lending disclosures. It requires creditors to state the cost of borrowing in understandable terms to allow consumers to figure out how much loans would cost, and to compare them.

Consumer Debts

Debts incurred for personal, as opposed to business, needs.

Consumer Price Index

Also known as CPI. A measure of the cost of living determined by the Bureau of Labor Statistics.

Credit

Money that a lender gives to a borrower on condition of repayment over a certain period.

Credit Bureau

A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union.

Credit Card

A plastic card with a coded magnetic stripe that entitles the holder to a line of credit. The amount of credit and the interest rate are determined by the borrower's income and credit history as reported by the credit report.

Credit History

A record of a person's debt payments.

Credit Insurance

Insurance that pays off the credit card debt should the borrower lose his job, die or become disabled. The payoff is calculated monthly to only cover the debt that was recorded on the last billing cycle.

Credit Life Insurance

A type of life insurance that helps repay the loan if the consumer becomes disabled. It is optional coverage. When taken out, the cost of the policy is sometimes rolled into the loan principal amount.

Credit Limit

The maximum amount of credit that is allowed on an account.

Credit Line

The maximum amount of money available in an open-end credit arrangement such as a credit card, or overdraft protection.

Credit Rating

A judgment of someone's ability to repay debts, based on current and projected income and history of payment of past debts. Sometimes expressed as a number called a credit score

Credit Report

If you have ever applied for a credit card, a personal loan, or insurance, there is a file about you. This file includes where you work and live, how you pay your bills. It even includes whether you have been sued, arrested, or filed for bankruptcy.
Credit Reporting Agencies gather and sell this information to creditors, employers, insurers and other businesses. Periodically check your credit report for accuracy to know what has been reported and correct any errors. To check on your credit report contact the three major national credit bureaus: Equifax, Experian and Trans Union.

Credit Reporting Agency

A company that compiles credit activity into a credit report. This file includes where you work and live, how you pay your bills. It even includes whether you have been sued, arrested, or filed for bankruptcy. These reports are available to individuals and lenders who have a valid need for the information. The three major credit bureaus are Equifax, Experian and Trans Union.

Credit repository

An antiquated term for a credit bureau.

Credit Scoring

Scoring system used by creditors to determine if you are a good risk for credit cards, auto loans and home mortgages. Analyzes data from your credit application and credit report about your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt and the age of your accounts. It treats all applicants objectively by comparing your credit information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. The lower your score, the higher your interest rate will be.

Credit Scoring System

A numerical system designed to measure the likelihood that a borrower will repay a debt created by assigning scores to various characteristics connected to creditworthiness.

Credit Union

A nonprofit, cooperative financial institution owned and controlled by the people who use its services, usually a group such as employees in the same company or industry. Credit unions historically have been able to offer lower rates and fees and still operate in the black. Credit unions rely on a financial reserve to absorb unexpected losses from loan defaults or other financial setbacks, and the majority of credit unions carry federal deposit insurance that protects individual accounts up to a specified amount in the event the credit union fails.

Creditor

One who is owed money.

Customer Identification File (CIF)

A computerized central file of information about a bank?s customers that includes account and credit information.