Credit Scores and Reports

Credit card glossary terms to know for first-time card users

New to credit? These credit card definitions will help


Ready for your first credit card? Before you start charging, here are credit card terms that will help you become a responsible credit card user.

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Credit card glossary terms to know for first-time card users You’ve heard the horror stories about people carrying thousands of dollars in credit card debt, and you don’t want to be one of them. Before you get your first credit card — and certainly before you go putting purchases on plastic — become familiar with these credit card terms. By taking a few minutes to educate yourself about how credit cards work, you can prevent mistakes before they happen — and perhaps save yourself a lot of money and headaches down the road. (Back to glossary of common credit card terms.)

Glossary terms to know for first-time credit card users

Annual fee — Some issuers charge an annual fee for use of a particular credit card … (more)

Annual percentage rate (APR) — This is the annual interest rate you will be charged if you carry balances on a card … (more)

Card member agreement — The card member agreement spells out a card’s terms and conditions … (more)

Charge-back — A charge-back is a transaction returned through a credit card … (more)

Credit line — A credit line or limit is the amount of money the card issuer will let you borrow … (more)

Credit score — A credit score is a three-digit number summarizing how well a person has handled credit and debt … (more)

Credit report — A credit report is a compilation of the credit history of an individual, from which a credit score is generated … (more)

Credit utilization ratio — Your credit utilization ratio compares the amount borrowed to credit available … (more)

Due date — The is the day your payment is due. After the due date, you may be assessed a late payment fee … (more)

Finance charge — A finance charge is the total cost of borrowing, including interest and fees … (more)

Grace period — The grace period is the time during which you are allowed to pay your bill without incurring a late fee … (more)

Minimum finance charge — This is the minimum amount of interest you will be charged if you don’t pay the balance in full … (more )

Minimum payment  — The minimum payment is the lowest amount of money required to satisfy a current bill … (more)

Over-the-limit fee — This fee can be charged when your balance goes over your credit limit … (more)

Schumer Box — The Schumer Box is a standardized disclosure “box” disclosing terms and interest rates … (more)

Secured credit cards — Secured credit cards are those that require collateral that will serve as your credit line … (more)

Terms and conditions — This is the document that outlines the rules that apply to a specific card … (more)

Unsecured credit cards — Unsecured credit cards are the most common type of card and don’t require a deposit … (more)

Variable interest rate — With variable-rate cards, your APR can change with the prime rate … (more)

See related: Glossary of common credit card terms, Do your homework when shopping for your first credit card, 7 tips for handling your first credit card, Managing on-time credit card payments, Managing and getting rid of credit card debt

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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