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Credit Cards

Credit Card Glossary

A

A check that credit card issuers provide that allows you to access cash from your available line of credit.

Account agreement[skip to next word]

Terms and conditions for the use of a credit card and the repayment of debt between you and your lending institution. You'll receive a copy when you open an account, and may also request one through the issuing company's customer service department.

Account balance history[skip to next word]

A historical snapshot of your available balance displaying transactions that are processing or cleared.

Account statement[skip to next word]

A printed or online statement of all the transactions in your account during a statement cycle.

Active account[skip to next word]

A bank account in which there are recent transactions.

Annual (or monthly) maintenance fee[skip to next word]

A fee that is charged either yearly or monthly for the use of your credit card if your account is open or if you maintain an account balance, whether or not you have active charging privileges. Monthly charges will appear on your statement as "Monthly Maintenance Fee" and annual charges as "Annual Fee".

Annual percentage rate (APR)[skip to next word]

The interest charged on a credit card expressed as an annualized amount. The APR is listed in the account agreement, as well as on your monthly billing statements.

Annual percentage yield (APY)[skip to next word]

A percentage rate reflecting the total amount of interest paid on a deposit account (checking, savings, CDs, IRAs), based on the interest rate and the effect of interest compounding for one year.

ATM cash advance[skip to next word]

A loan you take out against a credit card using an automated teller machine (ATM) and your personal identification number (PIN).

Authorized transaction[skip to next word]

A debit card purchase you make without entering a PIN at specific types of businesses. The amount of your transaction is not deducted from your available balance until the final purchase amount is received from the merchant, because the initial amount of the transaction is often higher than the final transaction.

Certain businesses will submit higher authorization amounts as a normal course of business. These businesses are often catalog businesses or travel related (such as airlines, hotels and car rentals).

Automated clearing house (ACH)[skip to next word]

A nationwide funds transfer network that enables participating financial institutions to distribute electronically credit and debit entries to bank accounts and to settle such entries.

Automated teller machine (ATM)[skip to next word]

A machine that allows you access to financial transactions in a public space without the need for interaction with another human being.

Automatic funds transfer[skip to next word]

An arrangement that moves funds from one account to another automatically on a pre-arranged schedule: for example, every payday or once a month.

Automatic payment[skip to next word]

An arrangement that automatically deducts funds from your account (usually a checking account) on the day you choose in order to pay a recurring bill (such as car, insurance, mortgage payments, etc.)

Available balance[skip to next word]

The amount of money in a deposit account that is available for immediate use.

Average daily balance[skip to next word]

The sum of all the daily account balances during an accounting period (usually a monthly statement cycle) divided by the number of days in the same period. May be used to determine whether a service charge applies or whether your account qualifies for special services or discounts. See "minimum daily balance."

B

The total amount you owe on a credit card account at any given time. See also balance subject to interest charge.

Balance subject to interest charge[skip to next word]

The balance amount that's used to calculate interest charges for your credit card account's periodic statement. The most common methods are the average daily balance and the adjusted balance.

Balance transfer[skip to next word]

A transfer you initiate of all or part of the balance owed on one credit card to another credit card.

Bank cash advance[skip to next word]

A type of cash advance you take out on a credit card account. Bank cash advances can be obtained with your card at an ATM and over the counter at a banking center; they can also be obtained with your account number via a same-day online transaction, and as overdraft protection. They can also include the purchase of foreign currency, money orders or traveler's checks from a nonfinancial institution, as well as person-to-person money transfers, bets, lottery tickets, casino gaming chips or bail bonds with your card or account number (including through the use of an enabled mobile device), which are referred to as cash equivalents. Returned payments are bank cash advances.

 

Since only a portion of your total credit line is available for bank cash advances, it's important to keep track of the remaining amount that you can use for bank cash advances.

Banking center[skip to next word]

A Bank of America branch office. There are more than 5,000 Bank of America banking centers nationwide. See ATM & Banking Center Locator.

Billing cycle[skip to next word]

The period of time (usually one month) between credit card account statements.

Bill Pay is a Bank of America Online Banking service that allows you to pay your bills online using your checking account. In addition, you can elect to receive e-Bill–electronic versions of your paper credit card bills–from Bank of America and a variety of other companies, including AT&T Long Distance, Sears and Texaco. See the list of companies currently offering e-Bills.

Bounced check[skip to next word]

A check returned that is returned to the depositor because there are not sufficient funds to pay the amount of the check.

C
Canceled check[skip to next word]

A check that has been paid. A canceled check may generally be used as proof of payment.

A loan you make against your credit card account. Bank cash advances, check cash advances and direct deposits are all cash advances. Each cash advance is often subject to its own annual percentage rate (APR).

Cash credit line[skip to next word]

The portion of your credit card account's total credit line that can be used for bank cash advances.

Cash equivalent transaction[skip to next word]

A purchase of "cash equivalents"—items that can be used as or changed into cash—from any seller other than a financial institution. Examples of cash equivalents may include casino gaming chips, foreign currency, money orders, wire transfers and travelers checks from a non-financial institution. Please refer to your account agreement to find out what types of transactions your credit card issuer considers cash equivalents.

Cashier's check[skip to next word]

A check issued by a bank and paid from its funds. A cashier's check will not usually bounce because the amount it is written for is paid to the bank when it is issued, and the bank then assumes the obligation.

Certificate of deposit (CD)[skip to next word]

A time deposit that is payable at the end of a specified amount of time or "term." CDs generally pay a fixed rate of interest and offer a higher interest rate than other types of deposit accounts. Terms can range from 7 days to 10 years. CDs are insured by the FDIC up to the applicable limit. If early withdrawal from the CD prior to the end of the term is permitted, a penalty is usually assessed. See also: "Federal Deposit Insurance Corporation".

Certified check[skip to next word]

A check for which the bank guarantees payment.

Check cash advance[skip to next word]

A cash loan you take from your credit card account's available line of credit, using an access check provided by your credit card issuer.

Check enclosure[skip to next word]

A service where the bank returns your canceled checks with your account statement.

A service that provides images of canceled checks. Each account statement includes images of checks (up to 10 per page) that posted to the account during the statement cycle. You can view and print copies of the front and back of checks posted within the last 180 calendar days by signing on to Online Banking. You can also request copies of checks by visiting your nearest Bank of America banking center, or by calling the customer service number on your statement.

Checking account[skip to next word]

A type of deposit account that enables customers to deposit funds and withdraw available funds on demand, typically by writing a check or using a debit card. These accounts are sometimes interest-bearing.

Cleared transactions[skip to next word]

Transactions are given a "cleared" status when they have been posted to your account. Cleared (or posted) transactions are not always final because there may be certain circumstances when such transactions may be reversed.

Check safekeeping[skip to next word]

A service where the bank keeps a copy or digital image of all checks written against your account for 7 years instead of returning them with the account statement. You can view photocopies of canceled checks posted within the last 180 days by signing in to Online Banking or visiting your nearest Bank of America banking center.

Combined balance[skip to next word]

The total funds you have in all of your linked accounts, such as savings, checking and CDs. For some checking accounts, the combined balance determines whether the monthly fee can be avoided.

Compound interest[skip to next word]

Interest that is calculated on both the accumulated interest and the principal balance in the account. The more frequently interest is compounded, the higher the effective yield.

A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date.

Typically a plastic card issued by a bank or other financial company for the purpose of purchasing goods and services using credit. In most cases, a credit limit is established for each account.

Credit history[skip to next word]

Your credit history includes information about whether you pay your bills on time and how much you owe your creditors. The information generally includes your name, address, employer, length of employment, account types, account balances, payment history, collection information, public records and inquiries. Your credit history generally goes back seven to ten years.

Credit report[skip to next word]

A complete record of a consumer's credit history. Lenders may use your Credit Report, along with your Credit Score, to set terms of credit (such as APRs) offered to you.

Your credit score is a number that reflects the information in your Credit Report. Your credit score can change if your Credit History changes. Generally, the higher your credit score, the more likely you are to be offered better credit terms. An example of a common credit score is the FICO score.

Current payment[skip to next word]

It is the amount of the next payment due.

Custodial account[skip to next word]

An account created for the benefit of a minor (a person under the age of 18) with an adult as the account's custodian.

D
Daily Periodic Rate (DPR)[skip to next word]

The APR expressed as a daily rate. Divide the Annual Percentage Rate by 365.

A decrease in a deposit account's balance, such as when a check posted to the account.

A plastic card that deducts money directly from the designated Bank of America checking account to pay for goods or services. It can be used anywhere Visa® or MasterCard® debit cards are accepted and no interest is charged. A debit card can also be used at ATMs to withdraw cash.

Money added into a customer's bank account.

Direct deposit and check cash advances[skip to next word]

A transaction category that includes access checks or transferring funds directly from your credit card to a deposit account (excluding Overdraft Protection Cash Advances or Same-Day Online Cash Advances).

Information pertaining to an account's services, fees and regulatory requirements.

E
Electronic funds transfer (EFT)[skip to next word]

Any transfer of funds initiated by electronic means from an electronic terminal, telephone, computer, ATM or magnetic tape.

Emergency cash[skip to next word]

A service provided by Visa to Bank of America personal debit card customers. In the case of emergency (theft, etc.) replacement cash can be delivered to you directly or to a convenient location anywhere in the world, 24 hours a day, 365 days a year.

F
Federal Deposit Insurance Corporation (FDIC)[skip to next word]

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects depositors against the loss of their insured deposits if an FDIC-insured bank fails. FDIC insurance is backed by the full faith and credit of the United States government. The FDIC insures deposit accounts (checking, savings, money market savings and CDs) up to $250,000 per depositor, per insured bank, for each account ownership category.

The time between the date when a check is deposited to an account and the date the funds become available.

Foreign transaction[skip to next word]

Transactions made in a foreign currency or U.S. dollars that are processed outside the United States.

Foreign transaction fee[skip to next word]

A fee assessed on a credit card account for transactions in foreign currency or U.S. dollars that are processed outside of the United States.

Unauthorized use of a credit card account, or a deception deliberately practiced in order to gain unauthorized access to an account.

G

The amount of time you have to pay your purchase balance in full without paying interest. A grace period will not apply if you revolve a balance. Bank cash advances, balance transfers, direct deposits and check cash advances generally do not have a grace period. There is no grace period for payments, which are due no later than the payment due date.

H

Deposit holds are delays to the availability of a portion of deposited checks. They occur infrequently and, if you receive one, you will receive a notice with the reason and the new date the funds will be available. The date on the hold notice will replace the credit pending date for that portion of the deposit. Please refer to the Deposit Agreement for more details.

 

Situations that typically cause a check to be held include:

  1. The check is for an amount larger than account holder normally deposits.
  2. The source of the check (for example, a personal check is more likely to be held than a government check).
  3. The financial institution suspects that it cannot collect the funds from the account the check is drawn on.
  4. Previous overdrafts on the account.

Unlike deposit holds, balance holds are holds placed on an account holder's entire account balance.

I
Inactive account[skip to next word]

A bank account in which there have not been any transactions for an extended period of time. In some cases, when there has been no activity in the account within a period specified by state law (generally at least 3 years), the law requires the bank to turn the account over to the state as unclaimed property.

Interest bearing[skip to next word]

An account that earns interest.

Interest charges[skip to next word]

A fee charged as interest on a credit card loan. Interest is calculated by multiplying your credit card balance with the daily interest rate. That figure is then multiplied by the number of days in the billing cycle. Interest is only charged if the balance is comprised of transactions for which there is no grace period or the balance is not paid in full each month. If you only make transactions that have a grace period and you pay the entire balance each month, no interest charge is applied.

Interest rate[skip to next word]

The percentage of interest paid on an interest-bearing account, such as savings, CDs and some checking accounts; also, the percentage charged on a loan or line of credit. Different types of accounts and loans pay or charge different rates of interest. See "original interest rate."

J
Joint account[skip to next word]

An account owned by two or more people.

A Jumbo CD is the same as Certificate of Deposit (CD), except the deposit amount is typically a minimum of $100,000.

L

A fee charged when the credit card issuer or lender does not receive the total minimum payment due by the payment due date.

Linked account[skip to next word]

Any account linked to another account at the same financial institution so that funds can be transferred electronically between accounts. In some cases, the combined balance of all linked accounts may determine whether monthly service and other fees are applied to the account.

M
Maturity date[skip to next word]

The date that a CD term ends, the bank stops paying the agreed-upon interest and you can choose to take the money deposited or renew the term.

Minimum daily balance[skip to next word]

The lowest end-of-day balance in an account during a statement cycle; a certain minimum daily balance is often required with interest-bearing accounts to avoid a service charge or qualify for special services. See “average daily balance.”

Money market account[skip to next word]

A savings account that generally earns higher rates than regular savings accounts and limits you to no more than a total of six automatic or preauthorized transfers, telephone transfers or payment from a savings account each monthly statement cycle. Three of the six transfers may be made by debit card purchase, check or similar order.

A financial instrument, issued by a bank or other institution, allowing the individual named on the order to receive a specified amount of cash on demand. Often used by people who do not have checking accounts.

The fee charged to maintain a particular account, such as a checking account. Bank of America offers many options to avoid the maintenance fees on checking and savings accounts.

N
Non-bank ATM [skip to next word]

An ATM or cash machine that provides ATM cardholders with access to their accounts, but is owned and operated by an independent bank or financial institution. Fees generally apply to cash withdrawals at non-bank ATMs and they don't generally accept deposits.

Non-sufficient funds fee (NSF)[skip to next word]

A fee that occurs when there is not enough money in an account to cover a given transaction.

O
Online Banking[skip to next word]

A service that allows an account holder to obtain account information and manage certain banking transactions via personal computer or mobile device.

New interest rate that applies after taking advantage of a CD's Opt-Up feature. You may "opt-up" one time, starting in the seventh month of the term of the CD.

Original interest rate[skip to next word]

Rate assigned when a CD account is opened. The original interest rate is listed on your CD account receipt and statement.

An overdraft occurs when a bank makes a payment that has been requested (such as a check), even though there are not enough funds available in the account cover it. This type of payment is known as an "overdraft" and the account is said to have been "overdrawn." See also "Overdraft protection."

Overdraft protection[skip to next word]

A Bank of America service that allows you to link a checking account to another account, such as a credit card or line of credit, to help protect against returned items or overdrafts. When your checking account does not have sufficient available funds to cover a check, funds are automatically transferred from the available balance in the linked account to cover the check.

Overdraft protection cash advance[skip to next word]

A type of overdraft protection that's assessed to your credit card account as a cash advance, if you’ve linked your credit card account to a deposit account that becomes overdrawn.

Over the counter ("OTC") cash advance[skip to next word]

 A cash advance you can withdraw from your credit card account's available cash credit line via a teller in a bank or other financial institution.

P
Payment allocation[skip to next word]

The method used by your credit card issuer to assign all or part of your payments. If you have balances with different rates, your total minimum payments may go to pay off the balance with the lowest rate first. Any extra amount you pay — over the total minimum payment — will go to pay off the balances with higher rates first.

Payment due date[skip to next word]

The date that the payment on your credit card is due. Your payment due date occurs at least 25 days after the close of each billing cycle.

The APR(s) which may be applied to your account under certain default circumstances, such as if you pay late, miss a payment, or pay less than the full amount due by your payment due date. Also known as "Default APR" or "Default Rate."

Personal identification number (PIN)[skip to next word]

The unique number you must use to access your credit or deposit account at an ATM or make a purchase with a debit card. Your PIN should always be kept confidential.

Posted transaction[skip to next word]

A transaction or item that appears on your account statement. "Posted" transactions have been processed by your issuer, but funds for the transaction may still be in transit. Unposted transactions have not yet been processed, but may affect the amount of credit available.

Processing transaction[skip to next word]

Any deposits, transfers, purchases or withdrawals that have been added to or deducted from your available balance but have not yet cleared.

Promotional rate (or introductory rate)[skip to next word]

A temporary interest rate that's lower than the regular rate and offered for a specified period of time. Some promotional or introductory rates may only apply to certain types of transactions such as balance transfers and/or require a minimum transaction amount.

Protected balances[skip to next word]

When an interest rate change for new transactions is applied to your account, any existing balances of that type will be identified as protected balances on your statement. Interest on protected balances generally continues to be calculated using the previous APR structures, not the newer rate, until the balances are paid in full.

The use of your credit card account or account number to buy or lease goods or services.

R

See "interest rate."

Residual interest charge[skip to next word]

The amount of interest that has accrued between the closing date of your last statement and the date your balance was actually paid. This only occurs on credit card balances that are accruing interest charges.

Returned item[skip to next word]

When you do not have enough available funds in your account to cover an item, and we decline to pay and return the item unpaid, we will charge a $35 NSF:Returned Item fee for each returned item. View your account agreement for additional information.

Returned payment[skip to next word]

Any payment that is returned unpaid for any reason, including the related interest charges.

S
Same-day online cash advance[skip to next word]

A cash advance transaction on an account through a same-day online funds transfer to a deposit account.

Savings account[skip to next word]

A deposit account which pays interest, but does not allow funds to be withdrawn by writing a check.

Simple interest [skip to next word]

The interest calculated only on the principal funds that have been deposited in the account; no interest is earned on interest that has already been earned on the principal.

A printed or online description of all the activity on your credit card account for a given statement's billing cycle, including transactions, fees, interest charges, payments and credits.

Statement billing cycle[skip to next word]

The amount of time between your last statement date and your current statement date. For instance, if your current statement is dated October 1, and your previous statement was dated September 1, there are 30 days in your statement cycle.

A request that the bank not pay a check or payment you have written or authorized. Stop-payment orders are generally placed for checks that have been lost or stolen, or in situations where a purchase is disputed. Stop payment orders generally expire after 6 months and a fee is usually charged for this service.

T
Time deposit (or CD)[skip to next word]

An agreement to deposit a stated amount in the bank for a fixed length of time during which a fixed rate of interest will be paid. Penalties are assessed if the funds are withdrawn before the end of the agreed-upon period.

Total credit line[skip to next word]

The total amount of credit available on your credit card account.

Total minimum payment due[skip to next word]

The minimum amount that you must pay each billing cycle, which is the sum of all past due amounts plus the current payment.

Transaction fee[skip to next word]

A fee that may be charged when making certain types of transactions with your Credit Card. It's usually a percentage of the total amount of the transaction. For instance, a transaction fee is often charged when you use your Credit Card for a Bank Cash Advance transaction, such as withdrawing cash from an ATM.

Transaction history[skip to next word]

The portion of your credit card account statement that itemizes every action in your account during your statement billing period.

Transaction limitations[skip to next word]

Refers to a Federal Reserve Board regulation that limits certain types of withdrawals and/or transfers you can make from your savings and / or money market deposit accounts. With such accounts, no more than 6 preauthorized or automatic transfers, or telephone / PC transfers (including bill payments) may be made each month, and no more than 3 of the 6 limited transfers may be made using a check or debit card. However, an unlimited number of withdrawals may be made at ATMs and teller windows.

The movement of funds from one account to another.

Travelers cheque (or travelers check)[skip to next word]

Check issued by a financial institution which functions as cash but is protected against loss or theft. Useful when traveling.

U
Uncollected Funds[skip to next word]

Refers to items deposited in an account that have not yet been collected (paid) by the bank on which they were drawn.

U.S. Prime Rate[skip to next word]

The prime lending rate offered by a number of the country's largest banks. It is frequently cited as a standard for general interest rate levels in the economy. The U.S. Prime Rate is often used to calculate variable interest rates. A set number or margin, determined by the issuer, is added to the U.S. Prime Rate to get the variable interest rate. When the Prime Rate goes up or down, the variable rate may change.

V

An annual percentage rate or interest charge that can increase or decrease based on marketplace conditions. Typically, the Variable APR is tied to an index, such as the U.S. Prime Rate.

Variable rate[skip to next word]

An interest rate that may fluctuate during the term of a loan, line of credit or deposit account. This rate may vary based on changes in an index that is outside the bank's control, such as the U.S. Prime Rate or other prescribed criteria, or the bank may change the rate at its discretion.

W
"What if" rate[skip to next word]

A calculation that can determine possible rate scenarios based on your input. Results may not represent actual rates.

Wire transfer[skip to next word]

An electronic payment service for transferring funds (for example, through the Federal Reserve Wire Network or the Clearing House Interbank Payments System).

The removal of funds from an account.