Student Credit Cards : Credit Definitions A to Z

Credit Definitions A to G:

Affinity Credit Card: A credit card that is branded by two organizations. One is a credit card issuer and the other is a company or brand name. For example Citibank sponsors/offers the SONY credit card.

Annual Fee: The charge imposed yearly to use a specific credit card.

Annual Percentage Rate (APR): The yearly cost of carrying a balance on a credit line.

Available Credit: The amount of a credit line that has not been used. Available credit equals the "credit limit" minus the "current balance."

Bad Credit: Means exactly that, BAD CREDIT. Officially means a poor credit rating. Bad Credit comes about from making late payments, missing payments, exceeding card limits or filing for bankruptcy.

Balance: The total amount of money owed on a credit line. It includes any unpaid balance from the previous months, new purchases, cash advances and any charges.

Balance Transfer: Moving the debt, or balance, from one credit card company to another. Often done to achieve a lower APR.

Bankruptcy: Legal filing with a court of a person's or company's inability to repay debts. Bankruptcy is a LAST RESORT. It kills credit ratings and remains on credit reports for 10 years. Federal student loans, Federal income tax debt and Child support are all exempt from bankruptcy protection laws. There are two basic type of Bankruptcy: Chapter 7 and Chapter 13.

(Chapter 7 Bankruptcy)

•In a Chapter 7 Bankruptcy, a court or judge resolves most debts by selling assets and property of the person who filed for the bankruptcy. The court can take ALL assets ranging from cars and homes, to furnishings, jewelry or anything else that has value. Assets are then sold to pay off the debt of the filer.

•Chapter 7 bankruptcy will not eliminate debts from state or federal taxes, child support, federal student loans, court fines or judgements.

•NOTE: A Chapter 7 filing will remain on a credit report for 10 years.

(Chapter 13 Bankruptcy)

•In a Chapter 13 agreement, the court/judge creates a debt repayment plan which allows the bankruptcy filer to keep their property.

•In order to qualify to file under Chapter 13 bankruptcy, a person must have steady income and is forced to pay part of their income to respective creditors. The court/judge allows the bankruptcy filer to keep certain assets that have debts against them only if they pay them off under terms settled by the ruling of the court.

•Chapter 13 bankruptcy filing also remains on a person's credit report for 10 years, however there is a better chance of obtaining future loans or credit than if filed as chapter 7.

Billing Cycle: The total # of days between the last due date and the current due date on a credit card statement.

Billing Statement: A monthly bill from a creditor which summarizes the activity and expenses on an account.

Budget: A plan of incoming and outgoing monies. Expense and Income.

Cardholder Agreement: The issuer's written statement of terms and conditions relating to a credit card account. The cardholder agreement is required by Federal Reserve regulations. The agreement states the annual percentage rate, the monthly minimum payment formula, annual fee, if applicable, and the cardholder's rights in billing disputes.

Cash Advance: An instant loan from a credit card account. The Card Company will charge interest from the day the advance is taken until the day it is paid off. A transaction fee may also be charged based on the amount of the withdrawal.

Cash Advance Fee: A one-time fee for cash advances in addition to normal interest charges.

Charge Card: A card that requires full payment of the balance by the due date. It is not a line of credit and interest is not charged. An example is The American Express Card. The entire balance of what you have charged on the card the past month is due in full when the monthly bill comes in.

Co-Signer: A person who signs a loan or credit card agreement with the primary applicant. The co-signer is responsible for repaying the balance of the loan or debt in the event that the applicant does not.

Credit Card Debt: The unpaid balance on al credit card. This is not the minimum amount due, but is the total balance due on a respective line of credit.

Credit History: An official record detailing how people manage their debts. This information is collected by the three major credit reporting agencies and includes everything from one's Social Security number, current and prior addresses, detailed status of all credit lines or loans and employment info. A bankruptcy also appears in your credit history if filed within the past 10years. Information in your credit history is the determining factor in qualifying or disqualifying you from obtaining credit lines, home mortgages, loans, leases, and sometimes even employment.

Credit Limit: The maximum amount that a person is allowed to owe on a credit card. It includes purchases, cash advances, and any finance charges.

Credit Line: The amount of revolving credit. Any amount up to the limit of the line of credit may be "borrowed." The cost of purchases or cash advances, plus the interest charges, is paid off over a period of time. We reccomend you pay of your entire balance of the credit line each month as thisis the best way to build a positive credit history while increasing your credit line. If you do pay the outstanding balance over time, the credit line becomes available again for usage.

Debit Card: NOT a credit card. It is a card tied in to your bank account that allows purchases to be made with currently available funds that are instantly deducted from your respective financial account (usually your checking account.)

Debt: The total amount of $ a person owes to banks and creditors.

Default: The failure to repay a line of credit or loan according to the legal agreed terms and conditions. If you default on a line of credit or loan, the creditor/bank can sue in a court of law to ask the court to essentially force the person to pay off the entire debt balance.

Deferred Payment: Payments which are put off to a future date or extended over a certain period of time. Interest usually accumulates during a deferment. Federal Student Loans come with deferment options and many borrowers often elect to defer these student loan without interest penality.

Delinquent Account: A credit line or loan account where late payments have been received or the payments have not been made according to the respective terms and conditions.

Due Date: The day in which a payment must be received by creditor. After that date late fees are often charged, and late payments are often reported to the 3 major credit reporting agencies.

Finance Charges: The total $ amount paid to use a credit line, including interest, service and/or transaction fees.

Finance Company: A company or business that offers lines of credit and loans to consumers.

Fixed Expenses: Expenses such as mortgages, rent, student loan payments or car payments. These expenses really can't be changed and are re-occurring each month.

Fixed Interest Rate: An interest rate that does not change. It can only change if the credit issuer notifies the cardholder through an amended cardholder agreement.

Forbearance: A way of postponing repayments due to an "economic hardship." The lender/creditor sets forth the terms of a forbearance. Typically, interest does accrue during a forbearance period.

Grace Period: If there is NOT an outstanding balance a line of credit a grace period is the interest-free period of time between the date of purchase and when that purchase actually appears on the credit card statement. Note that a "grace period" is not the number of days after the due date during which a person can make a payment without being charged a late fee from the credit card company. Payments must always be received on or before the indicated due date on the actual statement.

>CONTINUE TO >PART 4 of our CREDIT SECTION.

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