Credit Card Dictionary

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A credit card offer with "pre-approved" only means that a potential customer has passed a preliminary credit-information screening. A credit card company can spurn the customers it invited with "pre-approved" junk mail if it doesn't like the applicant's credit rating.

A lender's charge to the borrower for paying off the loan before the end of the term. It is present in some mortgages, preventing borrowers from rapidly refinancing.

A method used by some card issuers where they base their finance charges on the amount owed at the end of the previous billing cycle

A type of line of credit loan coveted by consumers that fixes the interest at the prime rate for the life of the loan.

A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate. The rate given to consumers on their loans is often determined as the prime rate plus a certain percentage, which represents the lender's assessment of the risk in lending, plus its profit margin

1. The amount of money borrowed. 2. The amount of money owed, excluding interest. 3. The client of a real-estate agent.

A private label card is issued by a retail outlet, such as a department store or gasoline company, and contains the logo of the retailer. It is accepted only by the retailer who issued it. Retailers partner with a bank or a card-issuing management company to back the cards.

In credit card terms, the punitive rate is the highest interest rate the company charges. It can imposed when consumers violate their contract agreements by acts such as paying late or exceeding their credit limits.

As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the front ratio, is the percentage of monthly before-tax income that goes toward a house payment. The back ratio is the sum of the house payment and all other monthly debt -- credit cards, car payments, student loans and the like -- divided by before-tax income.

Percentage a borrower pays for the use of money, usually expressed as an annual percentage.

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