Glossary of Terms

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Looking for the meaning of a financial term?

Our Glossary of Terms offers definitions for frequently used words and phrases.

American Bankers Association

A banking trade association that brings together all elements of the banking community to promote the strength and profitability of the industry.

Amortization

The paying down of debt in regular installments over a period of time.

Annual Fee

A yearly fee charged by some credit cards for use of the card. Most Discover Cards do not have an annual fee.

APR (Annual Percentage Rate)

The measure of the cost of credit expressed as a yearly rate.

Authorization

The issuance of approval, by or on behalf of the card issuer, to complete a transaction with a merchant.

Automated Clearing House (ACH)

A federal association formed for the purpose of clearing debit and credit activity electronically.

Available Credit

The difference between the credit limit assigned to a cardholder account and the present balance, including authorizations outstanding.

Balance Transfer

Moving an unpaid balance from one open credit account to another. You may save money if you transfer balances to a credit account with a lower interest rate.

Cardholder

A person to whom a Discover Card has been issued or who is authorized to use a Discover Card.

Cardmember Agreement

A written document that provides details of your agreement with the credit card issuer.

Cash Advance

Using your credit card to get cash from a bank, ATM, or by writing a convenience check. Typically, the card issuer charges a cash advance fee for the transaction.

Charge Card

A specific kind of card that requires full payment of your balance with each billing cycle. Typically charge cards do not charge interest, but late fees can apply if full payment is not received by the due date.

Credit Limit

The maximum amount that you can charge on your credit card.

Credit Rating

A method of predicting the credit worthiness of both current and potential customers.

Credit Report

A report about your credit history that lenders (credit card companies, mortgage companies, loan agents, etc.) review to determine if and how much money they should lend to you. Your history for making timely payments, any outstanding debt and open lines of credit are all shown on your credit report. Your credit report is available from credit bureaus such as Equifax, Experian and TransUnion.

Credit Utilization

The percentage of the Line of Credit that has been utilized.

Debit Card

A card issued by a bank that directly accesses available funds from a bank account, typically a savings or checking account.

Default

When a customer doesn’t make a required payment to a credit card account, or otherwise violates the terms of the agreement between the credit card company and the customer.

Default Rate

A higher APR the credit card company charges after the customer has made late payments, exceeded their credit limit, or otherwise did not abide by the Cardmember Agreement.

Due Date

The date that the minimum payment is due.

Finance Charges

The cost of consumer credit expressed as a dollar amount.

Grace Period

A period of days between the transaction date and the billing date when a transaction can be paid off without incurring an interest charge.

Insufficient Funds

The available balance is not sufficient to cover a request for withdrawal.

Interest

See Finance Charge.

Introductory Rate

A lower APR provided by a credit card company for a limited period of time.

Late Charge

See Late Payment Fee.

Late Payment Fee

A fee charged when a payment has not been received by the specified due date.

Line of Credit

The amount of credit a lender will extend to a borrower over a specified period of time.

Minimum Payment

The smallest payment a customer can make each statement period to keep the account in good standing.

PIN (Personal Identification Number)

A security code that the customer uses with debit and credit cards to authorize transactions such as cash advances.

Prime Rate

An index rate that determines the interest rate a bank will charge customers. It is one way that a credit card company determines APRs.

Program Offers

Program Offers may be offered to accounts based on Cardmember need, and may include a reduction in the Annual Percentage Rate or other benefits to help a struggling Cardmember.

Revoked

The permanent closure of an account by the credit grantor.

Suspension

The taking away of charging privileges by the credit grantor.

Zero Balance

When your billing statement shows no outstanding balance and no new charges have been incurred.

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