Glossary of Credit Related Terms

Account Condition

Each account on your credit report has an account condition, which shows the present state of the account (current, past due, etc.), but doesn’t indicate the payment history of the account.

Account Monitoring

Once lenders make a decision to lend you money, they might want to review your credit report on a regular basis as they continue to manage their financial risk. This monitoring, called account monitoring, scans credit reports for certain risk characteristics as defined by the lender.

Account Number

Every cardholder's account is identified by an account number. Protect it and never give it out over the telephone unless you initiated the call.

Activate

To prevent fraud, many card issuers require you to call them when you receive your new card in the mail to verify that the correct person has received it. Until proper ownership is confirmed, the card may not be activated.

Activity

Activity is any transaction that appears on your bill, including purchases, cash advances, finance charges and fees. It also includes any payments made.

Additional Cardmember/Cardholder

Most issuers allow you to sign on an additional cardholder, such as a spouse, to your account. You are liable for any charges that the additional cardholder incurs.

Adjustable Rate Mortgage (ARM)

A mortgage where the interest rate fluctuates over the life of the loan..

Advance-Fee Loan

A loan calculated so that all the finance charges and other creditor expenses are deducted before the consumer receives the principal.

Affinity Card

A card that is offered jointly by two organizations. One is a credit card issuer and the other is a professional association, special interest group or other non-bank company. For example, Citibank and American Airlines sponsor the Citibank AAdvantage card.

Agreement

Your card issuer will send you a cardholder agreement that describes the terms that apply to your card, including the interest rate charged, method of calculating interest and any transaction fees. If your card issuer refuses to disclose fully the terms of your card agreement before you accept the card, you might want to shop around for an issuer that will.

Amortization

The process of fully paying off indebtedness by installments of principal and earned interest over a definite time.

Amount Due

Generally, the minimum monthly payment you must make, not the total amount you owe.

Annual Fees

A yearly fee charged by anybody for anything. 

Annual Percentage Rate

The cost of credit at a yearly rate.

Applicant

A person applying for credit privileges, employment or some other benefit.

Appraisal Fee

The charge for estimating the value of property offered as security.

Asset

Any thing that has value or use.

Authorized Account User

The person authorized by the contractually responsible party to use the account.

Automatic Payment

If you have a savings or checking account with the same bank that issues your card, you may be able to automatically transfer money from your bank account to pay a credit card bill. Automatic payment eliminates the risk of paying a bill late and being assessed a late charge.

Available Credit

The unused portion of credit that falls within the consumer's applicable credit limit, if any.

Average Daily Balance (Including Or Excluding New Purchases)

The most common method of calculating interest. To figure out your average daily balance, the bank will add up the amount you owe for each day of your billing cycle and divide that number by the number of days in the billing cycle (see billing cycle). New purchases may or may not be added to the balance, depending on the individual card's terms. The most favorable calculation excludes new purchases.