Credit Card Glossary

Letter S

Sales Draft

A record that stamps or provides evidence that a purchase was made by a cardholder.

Savings and Loan Association

The main function of a savings and loan association is to take deposits and provide consumers with or fund mortgages. In some cases savings and loan associations may also issue credit cards however it's usually not the primary focus of their model.

Savings Bank

Carrying either a state of federal charter, a savings bank may issue credit cards but their primary purpose is to encourage thrift by paying interest dividends on savings.

Schumer Box

The terms and conditions box required to be presented to consumers both on their statements and on credit card applications that discloses key information within the contract such as interest rates and all other pricing. The Schumer box got it's name from former Senate banking Committee chairman Charles Schumer.

Secured Credit Cards

Secured credit cards require collateral, usually if not always in the form of cash. They function similarly to regular credit cards as they usually have interest rates and in some cases annual fees. The reason why someone would apply for one of these is in the event that they have bad credit and cannot get approved for a traditional credit card. The idea is that because most issuers who provide secured credit cards report progress to the major credit bureaus, many consumers will obtain these to help rebuild their scores and credit histories.

Security Code

The three or four digit number on a credit card used for authentication purposes. When phone or online purchases are made a security code is usually required by the merchant.

Semi-Secured Credit Card

Typically semi-secured credit cards are earned over time after a consumer who originally has a secured card establishes a payment history and thus "trust" with their lender. The bank may then extend the credit line past what the initial secured line was without requesting additional collateral.

Service Charge

A generic term used to describe various charges that a credit card company imposes on their accounts.


When a batch of credit card accounts is closed by a merchants, the resulting buying and selling transactions among the parties with the exception of the cardholder are the settlement amounts.

Settlement Bank

The institution that executes the settlement on the credit card processing system on behalf of the member's bank.

Set-Up Fee

The fee that is sometimes charged on new credit cards for bad credit by predatory lenders. These are usually one-time fees and are charged when the account is initially opened.

Short Messaging Service

The functionality on a mobile phone that is commonly referred to as SMS texting. In addition to texting between mobile phones, in some cases short messaging services can be used to make payments when mobile payments are accepted.

Signature Strip

On the back of a credit card the place where the cardholder signs there name. This is intended to be cross-referenced with the signature on a receipt to verify that the person using the card is in fact the cardholder.


Used by thieves to obtain account information, a skimmer is a device that reads the information on the magnetic stripe of a credit card. They are typically hand-held but in some cases are attached to ATM machines and other places where unsuspecting cardholders use their credit cards.


The act of using a skimmer (see definition above) by thieves to steal account information from consumers.

Smart Cards

Usually found overseas, they are credit cards that contain micro-chips where account information is stored. They are also called circuit or chip cards and the chip usually provides the same functionality that a magnetic stripe found on US products.


See definition above for short messaging service.

Soft Inquiry

Also known as a soft pull, it's a quick glance at a credit report that is typically used to identify candidates for pre-approved offers. Soft inquiries do not have an impact on a consumer's credit report as they are almost always unauthorized.

Soft Pull

The same thing as a soft inquiry and the opposite of a hard pull. When a lender or bank performs a soft pull on a consumer's credit report, they are looking to get a quick idea as to whether or not that person meets the base criteria to carry one of their products. If they do, the institution will typically send out a notice or invitation to the person to apply for the product. If that consumer decides that they do want to apply for the offer, they will fill out the application and authorize the bank to perform a hard pull which grants them full access to the person's credit report to be used in the approval process.


The same thing as breakage - the term used to describe the amount on a gift card, usually a few dollars that goes unused as most retailers will not provide change in the form of cash if the full balance is not used on a gift card.

Standard APR

The APR or annual percentage rate that goes into effect after the 0% APR or introductory rate period expires. Because there are several different rates attached to credit cards - balance transfers, purchase, cash advance, the standard APR's may be different for each type of transaction.

Standard Floor Limit

The currency limit on transactions above which authorizations requests are required.

State Bank

Banks can incorporate as a national bank or as a state-chartered bank. State banks may issue credit cards as well as perform other standard banking operations and are regulated and chartered both by their respective state's banking regulator an the FDIC.


The hard or electronic copy of all activity on a particular account during a cycle provided to consumers or corporations so that they can both pay their bill and have a record of their account activity for accounting purposes. Hard copies are usually delivered via direct mail and electronic copies may be viewed online.


Taking out an interest free loan or very low rate loan and depositing the funds into a high yield savings account with a higher return than the interest charged on the loan. The practice, also known as arbitrage, is used to play the interest rate spread to ultimately make money.

Stored Value Card

A credit card device with a chip that contains stored money value. They can sometimes be reloaded via ATM machines or electronically through a mechanism at banks but most are disposable and may be thrown away when the balance has been depleted.

Sub-prime Credit

One with sub-prime credit will not get approved for elite pricing. As it relates to credit cards, people with sub-prime credit are usually those with scores below 600 and are more than likely only eligible for credit cards for people with bad credit.

Sub-prime Credit Card

A credit card for those with sub-prime credit (see above). People with damaged histories need to proceed with caution when looking for these offers because some lenders who issue them impose extremely unreasonable interest rates and fees.