Credit Card Glossary
Use this glossary of credit card terms to better understand the definitions and meanings for some of the most common credit card terminology.
A
Access check
A check that credit card issuers provide that allows you to access cash from your available line of credit.
Account agreement
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 alerts
Email or text communications that can alert you of events that occur with your Online Banking account, such as when a bill is due or when your account balance reaches a certain point. Alerts help you stay on top of your account information, monitor your account activity and ensure your security.
Account balance history
A historical snapshot of your available balance displaying transactions that are processing or cleared.
Account statement
A printed or online statement of all the transactions in your account during a statement cycle.
Active account
A bank account in which there are recent transactions.
Additional cardholder
Additional cardholders are individuals other than the primary or secondary person named on the account and are authorized to charge to the card and make payments. They can also check the balance and available credit on the account. Additional cardholders are not authorized to make changes to the account. Please remember that if you are the primary cardholder, you are responsible for all charges made to the card in addition to any balance transfers and cash advances (including any Overdraft Protection amounts advanced) made by any additional cardholders added to the account.
Annual (or monthly maintenance) fee
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)
The interest charged on a credit card expressed as an annualized amount. The APR is listed in the account agreement, which is also a credit card agreement, and on your monthly billing statements.
ATM cash advance
A loan you take out against a credit card using an automated teller machine (ATM) and your personal identification number (PIN).
Authorized user
Authorized users can make purchases and obtain account information, but they are not responsible for making payments. Primary account holders can choose to add authorized users to an account.
Automated clearing house (ACH)
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)
A machine that allows you access to financial transactions, such as withdrawals and deposits, in a public space.
Automatic funds transfer
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
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 credit
The amount of unused credit available. Available credit is computed by subtracting the outstanding balance from your total credit line.
Average daily balance
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
Balance
The total amount you owe on a credit card account at any given time. See Balance subject to interest charge.
Balance subject to interest charge
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
A transfer you initiate that moves all or part of the balance owed on one credit card to another credit card.
Balance transfer fee
A balance transfer fee is a fee charged to transfer a balance from one account to another. This fee is typically 3-5% of the transferred amount.
Bank cash advance
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 financial center; they can also be obtained with your account number via a same-day online transaction, and as overdraft protection. They can include the following:
- Purchase of foreign currency
- Money orders or traveler’s checks from a non-financial institution
- Person-to-person money transfers
- Bets
- Lottery tickets purchased outside the United States
- Casino gaming chips
- Bail bonds with your card or account number (including via an enabled mobile device) - referred to as cash equivalents
- Returned payments
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.
Billing cycle
The period of time (usually one month) between credit card account statements.
Bill Pay
Bill Pay is an online service that allows you to pay your bills through Bank of America’s Online Banking. You can set up one-time payments, schedule future payments or create recurring payments from your Bank of America Advantage Banking account, your Money Market account, your Home Equity Line of Credit adatext , or from a non-Bank of America funding account.
C
Cash advance
A loan you make against your credit card account. Bank cash advances, check cash advances and direct deposits are all cash advances. A cash advance is often subject to its own annual percentage rate (APR).
Cash credit line
The portion of your credit card account's total credit line that can be used for bank cash advances.
Cash equivalent transaction
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.
Check cash advance
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.
Chip card
A chip card is a standard-size plastic debit or credit card that contains an embedded microchip as well as the traditional magnetic stripe. The chip is placed on the left-hand side of the card. It helps protect your information only when used at chip-enabled terminals or ATMs by creating a unique transaction code that is virtually impossible to replicate in a counterfeit card.
Cleared transactions
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.
Credit
A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date.
Credit card
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 Card Agreement
The Credit Card Agreement details the Terms and Conditions of your credit card account and includes information such as the interest rate, fees and other cost information associated with the account.
Credit history
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. Serious delinquencies like charge offs and collection accounts stay on your credit report 7-10 years, but your credit history goes back as far as your credit has been established.
Credit limit
Your credit limit is the maximum amount allowed to be charged on your credit card.
Credit report
A 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.
Credit score
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. FICO® is a registered trademark of the Fair Issac Corporation in the United States and other countries.
Current payment
The amount of the next payment due.
Custodial account
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)
The annual percentage rate (APR) expressed as a daily rate. To determine the DPR, divide the APR by 365.
Digital wallet
A type of digital software that allows you to securely make credit or debit transactions using your computer or smartphone without having your actual credit or debit card.
Direct deposit and check cash advances
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).
Disclosure
Information pertaining to an account's services, fees and regulatory requirements.
Dispute
A credit card charge that is questioned for one or more of a variety of reasons, including over-billing, failure by the merchant to deliver merchandise or services, defective merchandise or services, dissatisfaction with merchandise or services or billing errors.
E
Electronic funds transfer (EFT)
Any transfer of funds initiated by electronic means from an electronic terminal, telephone, computer, ATM or magnetic tape.
eBill
eBills are electronic versions of paper bills. An eBill arrives from a biller into your Bill Pay account service the same way a paper bill arrives from a biller into your mailbox. Bill Pay allows you to view all your eBills—as well as account balances, transactions and statement information—in one convenient place. You can also set up email notifications for when a new eBill arrives in your Bill Pay account.
F
FICO® Score
See Credit Score.
Financial center
A Bank of America branch office. Find a financial center
Foreign transaction
Any transaction (1) made in a foreign currency, or (2) made in U.S. dollars if the transaction is made or processed outside of the United States. Foreign transactions include, for example, online transactions made in the U.S. but with a merchant who processes the transaction in a foreign country.
Foreign transaction fee
A fee that may be assessed on a credit card account for foreign transactions.
Fraud
Unauthorized use of a credit card account, or a deception deliberately practiced in order to gain unauthorized access to an account.
G
Grace period
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
Hard inquiry
A hard inquiry occurs when you apply for a line of credit and the lender checks your credit report before making a lending decision. The lender must have a permissible purpose to access your credit report. A hard inquiry can lower your credit score and remain on your credit report for up to 2 years.
I
Inactive account
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 charges
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
The price you pay for borrowing money with your credit card on transactions such as purchases and cash advances. Some credit cards may have multiple interest rates, for example: You may have a low introductory rate when you open an account, followed by a higher standard rate for purchases, which could then become an even higher penalty rate if you fail to pay your bill on time. Interest rates on credit cards are expressed in a standardized way known as an Annual Percentage Rate (APR); this allows you to more easily compare cards.
Introductory rate
A lower interest rate provided by a credit card company for a limited period of time for certain specified transactions. Once this rate expires, your standard interest rate will apply.
L
Late fee
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
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
Minimum daily balance
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.
Mobile Banking app
An application that you download to your mobile device that enables you to securely access your financial accounts and conduct everyday banking. Get the app
Mobile wallet
See Digital wallet.
Monthly maintenance fee
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. See how you can help reduce your bank fees
N
Non-sufficient funds fee (NSF)
A fee that occurs when there is not enough money in an account to cover a given transaction.
O
Online Banking
A service that allows an account holder to obtain account information and manage certain banking transactions via personal computer or mobile device.
Over limit fee
A fee that is charged when an account balance exceeds the credit line available at any time during a billing cycle.
Overdraft
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 to cover it. This type of payment is known as an “overdraft” and the account is said to have been “overdrawn.” See Overdraft protection.
Overdraft protection
A Bank of America service that allows you to link an eligible checking account to another account, such as a savings, eligible checking, credit card or line of credit, to help protect against returned items or overdrafts. When your eligible checking account does not have sufficient available funds to cover a transaction, funds are automatically transferred from the available balance in the linked account to cover the transaction.
Overdraft protection cash advance
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
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
Paperless account
An account for which you have chosen to receive account statements and documents electronically instead of on paper. Log in to Online Banking to change your paperless settings.
Payment allocation
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
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.
Personal identification number (PIN)
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
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.
Preferred Rewards
Bank of America Preferred Rewards offers real benefits and rewards on your everyday banking. As your qualifying Bank of America deposit accounts and/or Merrill Edge® and Merrill Lynch® investment balances grow, so do your benefits. Learn more about Preferred Rewards
Processing transaction
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)
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
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.
Purchase
The use of your credit card account or account number to buy or lease goods or services.
R
Rate
See Interest rate.
Residual interest charge
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
When you do not have enough available funds in your deposit account to cover an item, we may decline to pay and return the item unpaid. View your Deposit Agreement and Disclosures for additional information.
Returned payment
Any payment that is returned unpaid for any reason, including the related interest charges.
Returned payment fee
A fee that is assessed if a payment on the account is returned for insufficient funds or any other reason. This fee still occurs even if the payment clears upon re-presentment.
S
Same-day online cash advance
A cash advance transaction on an account through a same-day online funds transfer to a deposit account.
Secured credit card
A credit card that requires collateral in order to receive credit. Often, your credit line is determined by the amount you deposit into a collateral account. Secured credit cards are designed for customers with no credit or bad credit, and can assist with rebuilding credit.
Soft inquiry
A soft inquiry is a term used to describe a credit report check that does not impact your credit score. Soft inquiries as a rule come from evaluations that don't result in the granting of credit, such as part of a background check.
Standard APR
The standard APR (annual percentage rate) comes into effect after the introductory period expires. Also known as the go-to rate.
Statement
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 balance
The balance of funds in your account as of your last statement. The balance as of your last statement does not reflect any disputes you may have submitted since your previous statement.
Statement billing cycle
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 billing cycle.
Stop payment
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
Total credit line
The total amount of credit available on your credit card account.
Total minimum payment due
The minimum amount that you must pay toward your credit card account each billing cycle, which is the sum of all past due amounts plus the current payment.
Transaction fee
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
The portion of your credit card account statement that itemizes every action in your account during your statement billing cycle.
Transfer
The movement of funds from one account to another.
U
Unsecured credit card
A credit card that is not secured with collateral. A customer may qualify for unsecured credit based on their credit history and financial strength.
Unusual activity
Transactions that are outside of normal customer spending and could indicate fraud.
U.S. Prime Rate
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
Variable APR
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
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 the bank may change the rate at its discretion.
Virtual card
See Digital wallet.
W
Welcome package
A set of documents you receive 10-14 business days after your application for a credit card is approved. These documents include a wide variety of additional information about the credit card and its benefits.
What if rate
A calculation that can determine possible rate scenarios based on your input. Results may not represent actual rates.
Z
Zelle®
Zelle® lets you send and receive money to and from friends, family and others you trust, typically within minutes, no matter where they bank in the U.S. Find Zelle in your Bank of America mobile banking app or in online banking. adatext Learn more about Zelle
Zero Liability Protection
Our zero liability protection means you’re not liable for fraudulent transactions made by others if you report them promptly.