Credit Card Glossary

Letter B

Bad Credit

Lenders by and large view consumers with bad credit as having a credit rating and scores below 600.

Balance

The amount owed on a credit card account. When the balance is not paid in full at the end of a billing cycle and the cardholder is not experiencing the benefits of a 0% rate, interest is charged on the amount.

Balance Chasing

Not often employed, but in some cases credit card issuers will lower credit lines as a consumer chips away at their balance. This tactic is often used when a substantial negative change has occurred to a consumer's credit rating or in some cases, when a bank's financial health suffers.

Balance Transfer Fee

When a consumer transfers an existing debt to a new card a transaction fee may be assessed. This fee is typically 3-5% of the amount. In several instances it is worth it to the cardholder from an economic standpoint if they are taking advantage of a 0% balance transfer offer as the savings in interest may be lesser than the fee imposed on the transaction.

Balance Transfer Fee Cap

When there is a ceiling to the amount of a balance transfer fee charged. The cap is commonly $75 when it exists.

Balance Transfer Fee Minimum

A designated minimum amount of a fee charged for a balance transfer transaction. This occurs only when very small amounts are moved to a new card. A bank may charge a 3% fee with a minimum of $15. If a consumer were to move a $300 debt to that card, 3% would be $9, but because the minimum is set at $15, the consumer would pay the balance transfer fee minimum.

Balance-to-Limit Credit Ratio

A scoring calculation as applied to credit scores where outstanding debt is compared to total potential debt based on credit lines available.

Bank Card

The hard plastic form of an account -- a credit card or debit card issued by a financial institution such as a Chase, Citi, or Bank of America credit card.

Bank Holding Company

A large firm, regulated by the Federal Reserve Board, that controls interest in a (or several) United States banks.

Bankruptcy

A term used to describe the process for a legal proceeding involving a business or person who is unable to repay debts. The types are Chapter 7, 11, and 13.

Basis Point

One basis point is defined as .01 when it comes to your interest rate. Though this may seem confusing, it is very straight forward. If an interest rate is 11.99% and moves to 12.99% it has moved 100 basis points.

Batching

Known as "closing a batch," it's when a merchant closes out all of their transactions (authorizations, voids, etc.) and sends them to the acquirer for payment. This is typically done at the end of a day.

Behavioral Monitoring

The controversial practice that some credit card companies have been thought to use that examines a consumer's behavior to speculate from a risk standpoint whether that consumer may at some point default.

Billing Cycle

The period between two credit card billing statements.

Billing Statement

Either a hard (paper) or electronic copy of activity of a credit card account. Commonly called a periodic statement or monthly statement, it includes all finance charges, purchases, and fees.

Blocks (Holds)

A block is a ceiling imposed on a transaction. They occur when purchases are going to be made for an item and the true amount is unknown. The most common place for blocks to be implemented is at a hotel as they do not know in advance how many paid amenities you are going to use.

Breakage

The unused portion on a gift card that goes unspent. Because most merchants will not give cash for the balance on gift cards, a portion of many issued to not get redeemed.

Business Credit Card (Business Card)

A credit card issued to a small business to alleviate the accounting nightmare that combining personal and business expenses on the same account creates. They are also used for tracking employee spending and are a good source for rewards accrual as business expenses are usually much higher than personal. To obtain one of these offers, an EIN is usually required.

Business Credit Score

A credit history analysis for a business used to calculate a score, or number, to assess a company's risk potential.

Business Guarantee

The rare case when an officer or owner of a business is not personally responsible for the purchases made on a business credit card. Instead, the company is responsible.