Letter C - Credit Card Glossary
Carbon Paper Packets
Originally, before electronic readers, when a consumer would use a credit card for a purchase in a store, an impression would be taken of the card over carbon paper. There would be three copies made as receipts: one for the bank, one for the cardholder, and one for the merchant. Now the only time you see them really is when a system is down due to lack of power or some other emergency. Most merchants still carry back-ups, especially in restaurants if a situation like this arises.
The lending institution or bank that issues a credit card.
The person who is issued or authorized to use a credit card account.
The T&C (terms and conditions) of an individual credit card account. This is a disclosure agreement that's a contract between an issuer and consumers. It includes all of the pricing and terms for the account that is opened including the APR, annual fee (if applicable), and all other vital terms. Consumer advocates, such as Professor Elizabeth Warren, have argued that cardmember agreements or contracts are too complex and difficult for the consumer to comprehend.
These are purchases made in person where a credit card is present. If you walk into a store and buy a shirt with your credit card it is a card present transaction. If you buy the shirt over the phone or online it is not.
An electronic device that can read the encoding on credit cards.
Also known as thieves, these people steal credit card information from unsuspecting consumers.
The processes used to try to compromise credit card information. Carders (see above) are the people who partake in carding. These terms are really only used internally in financial institutions.
Black-hat websites where carders congregate to share information about carding tactics.
Using a credit card to get an actual cash loan via walking into a bank, using a promotional cash advance check, or withdrawing from an ATM. Cash advances sometimes come with 0% introductory APR terms, but also will usually charge a fee (sometimes as high as 5%). The go to APR is usually higher than the purchase one outlined in the contract.
Cash Advance Check
A promotional check sent by an issuer that can be deposited into your bank account for use as cash. If the bank has a local branch you may also cash the check there in many cases.
Cash Advance Fee
When a consumer takes out a cash advance using their credit card, a cash advance fee is usually charged. These are usually in the 3-5% range of the total sum when they exist.
Cash Advance Rate
The APR used for cash advances. These are usually several points higher than those for purchases or balance transfers although at times during promotional periods there is an introductory rate lower than than the regular rates for the two.
A term used to describe a type of rewards credit card where a consumer earns cash rebates for purchases made. Note that some cash back credit cards are better and less confusing than others.
These are pretty much exclusively prepaid debit cards as they require you to upload money to them before use and function the same way that an ATM or check card issued by a bank does.
An illegal practice employed by carders where they take cash advances or with draw money from a victims account.
When a business is unable to pay their debts, this legal procedure gives them protection from creditors while they reorganize.
Another form of bankruptcy where a consumer repays their debts over 3-5 years. It is monitored and supervised by a bankruptcy court as it is also a legal procedure.
Unlike a Chapter 13, a Chapter 7 allows individuals to wipe away their debt. Though the more common, this can be completely devastating to their credit rating and makes it extremely difficult to ever obtain a loan or mortgage. If they are able to it usually comes with an much higher interest rate.
Issued primarily by American Express, these forms of plastic require payment in full at the end of every billing cycle. The sole advantage of these are the lucrative rewards programs.
When an unauthorized purchase has been made on a credit card account, a cardholder may contest the charge. If approved, the resulting transaction of refunding the money is a charge back.
Charge Back Period
The time frame from the point of sale that a cardholder may initiate a charge back.
When an account is past due, a charge off is the sum of the uncollected amount charged against a financial institution's or lender's reserves. It will typically be dealt with in-house until the time period has reached around 6 months although this varies from issuer to issuer. From a consumer standpoint, a charge off has an extremely adverse effect on their credit score once reported.
Charge Off Rate
The mathematical ratio of outstanding debt of a financial institution (on its books) to the amount of charge offs.
Chip and Pin Cards
Used exclusively in foreign countries for the time being, an alternative to a magnetic strip used by US card issuers, where an actual microchip resides embedded in the plastic. With these, a PIN number is required when transactions are made using the card.
After a batch is closed and the acquirer or merchant processor receives the batch, sends it to the networks who in turn send it to the issuing banks. The fees are then deducted and the total amount minus the fees are then transferred back through the network to the acquirer.
Exactly how it sounds. Thieves or criminals try to replicated actual credit cards or use counterfeit ones to make functional ones with real account numbers that have been hijacked or stolen.
Closed Loop Card
A term used to describe a card-specific offer such as a store card or gift card. It can only be used there.
An offer with a rewards program or charity donation perk. It is issued by a bank and carries a network. There is an agreement between the merchant, organization, or charity and the bank or network to make this happen.
A person who signs an agreement to become legally liable for purchases made on a credit card or other loan for a high-risk consumer should they default. Typically a co-signer is a paternal or older family member.
The act of a thief where they call in to a financial institution to change the billing address of a credit card account that they have hijacked. They then use the card to make purchases and have the items they buy shipped to the new address.
Very rarely used with credit cards, the act where a valuable good is put up in the event that a person who takes out a loan defaults. In theory, a home is the collateral for a mortgage.
The practice of a department within a financial institution or an outsourced agency where they attempt to recoup or collect debts made on a defaulted account.
When multiple parties or entities are responsible for the purchases made on an account. The structure of these types of agreements and their guidelines vary based on the policies of the issuing bank.
This is essentially a term synonymous with business cards, i.e. an account intended not to be used for personal or individual use, rather for daily operations and expenses of a company.
Commercial Credit Score
This is a business credit score which is determined similarly to the way a personal one is calculated.
The idea that if you marry someone, their debts and assets are yours. Essentially, just as you may share a house, you share debt. This is only used or applied in a few states and we strongly suggest that you check to see if yours is one where it does. Additionally, if you are in one of those sates and are part of a domestic partnership you should see whether or not the sames rules apply.
Concierge Service Rewards
For some rewards cards, typically those with annual fees and reserved for those with superior credit, a concierge service may be provided.
An account with multiple names attached to it.
Consumer Credit File
This is a fancy way of talking about a credit report. It contains payment records, open accounts, and overall credit history and may be obtained from a credit bureau, Experian, TransUnion, or Equifax.
Consumer Credit Report
Synonymous with a G.19, it's the hard or electronic copy of a consumer credit file (see above).
Consumer Financial Protection Bureau
The controversial Government Agency, also known as the CFPB, implemented by the Obama Administration to act as a consumer watchdog over the lending and financial sector.
Cash advance checks issued by your credit card company that allow you to take cash advances on your account. They usually come with fees and higher interest rates than your purchase or balance transfer APR's.
Corporate Credit Card
The same thing as a commercial or business credit card, meaning one intended for corporate rather than personal use. Many require an EIN.
During bankruptcy proceedings, a judge may issue a "cramdown" which lowers the amount of the debt that you owe to a creditor.
A company that holds credit files. Know as a credit reporting agency, when you apply for any type of loan, the lender will perform a hard pull from Equifax, TransUnion, or Experian once you authorize them to do so. These are the three major credit bureaus.
Credit Bureau Risk Score
A compiled look at a person's credit history based on the information obtained and reported to one of the three major bureaus. This information is used to determine one's creditworthiness or risk during the loan application process.
An alternative method of payment accepted by hotels, airlines, restaurants, online retailers, service providers and just about every other type of merchant you can think of. Credit cards, as opposed to charge cards, allow you to carry a balance but interest is charged on it if you elect to do so.
Card Card Accountability, Responsibility, and Disclosure Act of 2009
Implemented in May 2009, this is a consumer financial protective measure requiring issuers to give consumers more information about their accounts and limited/reformed some practices that the Government deemed questionable. You may view more information about it, also known as the CARD Act on the White House Website.
Credit Card Number
The unique number on the physical plastic tied to a person's account. The number on the card is almost always the exact same as their account number and starts with a unique code based on the bank and network specific to them.
A professional or agency who sets up a debt management plan or provides guidance on how to chip away at a consumer's debt. Though many of them are fairly reputable, some are not and it's best to do your research on these companies if you find yourself in a situation where you need guidance or help and feel that this is your best option.
You may contact a credit bureau to put a freeze on your credit which prevents anyone from accessing your report. Some people elect to do this when they feel that they are in a situation where their identity has been compromised or in the event that it already has. Depending on the bureau, it may come with a nominal fee.
Your record of debt, loans, and payments compiled by the three major credit bureaus. Businesses also have them as well.
A hard or soft pull on your credit history or report. Lenders may perform a soft pull to gain access in the event that they identify you as a potential to receive a pre-approved offer. A hard pull which has an impact on your credit score in most cases needs to be authorized and is typically done when you apply for a loan; and requires a signature.
Credit Life Insurance
Similar to regular life insurance in its structure, this allows you to purchase protection to repay your debts in the event of premature or unexpected fatality.
The ceiling or how much you are allowed to spend on your credit card without being penalized and/or declined when you go to make a purchase.
Similar to a credit limit, the amount of many you can spend on a card.
Credit Monitoring Service
Typically this is a paid service that monitors and notifies you of any changes to your credit report. It's a good idea to know where you stand from a lender's standpoint and this service is also extremely warranted if you suspect that your identity has been stolen. The other common use is when a consumer is planning on making a large purchase that demands a loan. Leading up to the application, the individual may sign up for one of these to make sure that nothing has negatively impacted their credit report.
An individual's responsibility to pay off an open account. When the account is open, they are bound by the terms and conditions of that credit card or loan contract.
Several factors make up your credit rating, including debt to income ratios, payment history, employment, and income. It's the measured creditworthiness and risk of a potential applicant.
Obtained from the three major credit bureaus, a credit report, is a snapshot of your credit history. Your report may vary based on which bureau it is taken from so it's a good idea when you apply for a loan to know which bureau the lender will pull your report from if they have a policy where they only perform a hard pull from one or two instead of all three.
Credit Reporting Agency
A credit bureau: Equifax, TransUnion, or Experian.
Usually cooperatives that require some type of common affiliation, credit unions are financial institutions that not only provide people within their community with checking and savings accounts, but issue credit cards and loans as well in many cases.
Credit Utilization Ratio
Used to calculate credit scores, it's a formula that factors in debt to income, debt to credit line, and several other factors that will provide a lender with an idea of a consumer's potential risk. Though not exact, it is widely used by underwriters and other financial institutions.
Currency Conversion Fee
The same thing as a foreign transaction fee. When you make purchases overseas, it's the fee assessed due to the transactions involving foreign banks. Usually a currency conversion or foreign transaction fee is 3%. Anything else is viewed by most as too high.
The security code used, especially when making online purchases that's located either on the front or back of your credit card. It's used to verify that the person who is making the transaction is allowed to do so and has a copy of the card. A CVV is called different things depending on the network, but regardless of the name, it serves the same purpose in all cases.