Credit Card Vocab

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Credit Card

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A plastic card that provides credit in exchange for a future payment with interest that is to be paid on a specific schedule.

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Credit

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An agreement to provide goods, services, or money in exchange for future payments with interest by a specific date or according to a specific schedule.

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Interest

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The cost of credit, typically expressed as a percentage of the principal amount.

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Grace Period

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The length of time a cardholder has to pay a bill and avoid an interest charge, typically 23-30 days.

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Introductory Rate

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A lower interest rate offered on a new credit card, usually for the first 6 months, after which the rate increases.

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Minimum Payment

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The smallest amount a cardholder can pay to keep the account in good standing.

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Finance Charge

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The total cost of borrowing, including interest and any fees.

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Credit Score

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A numerical representation of a person's creditworthiness, based on their credit history.

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Late Payment Fees

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Charges incurred when a payment is not made by the due date.

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Cash Advance

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A service that allows cardholders to withdraw cash against their credit limit, often with higher fees and interest rates.