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Serving The Military Community
Credit Terms To Know:
> Annual fee: A yearly fee you may pay for
having a credit card. A card with “no annual
fee” will have other fees, such as late payment or finance charges.
> Annual Percentage Rate (APR): The
amount of interest you will pay yearly on a
loan.
> Automatic deduction: An automatic trans-
fer of money from your bank account to a
merchant’s on a regular basis to pay recurring expenses such as mortgage payments,
utilities or other
monthly bills.
> Credit card: (also called a charge card) A card
issued by a bank or business that allows you
to purchase items on borrowed money. You
will receive a monthly statement listing your
purchases and the amount of money you owe.
> Credit limit: The maximum dollar amount you
can charge (borrow), determined by the credit
lender.
> Credit report: A record of your credit trans-
actions that includes timeliness of payments,
number of credit cards or accounts, and any
record of bankruptcy or other financial problems.
> Credit score: A number based on your credit
> Cash advance: A loan
that allows you to borrow cash from a line of
credit or credit card,
for higher-than-normal interest rates.
report that lenders use to determine how
much money you may borrow and the interest
rate you will pay.
> Debit card: Like a credit card, a debit card is
> Certificate of deposit (CD): A timed deposit
instrument with a specific maturity date and
a fixed interest rate. You pay a penalty if
you withdraw money early.
> Checking account: A bank account that
allows you to write checks from deposited
money already in your account.
> Compounding: To earn or pay (interest) on
the accrued interest as well as the principal.
> Convenience checks: These are “checks”
sent by your credit card company that are
really a cash advance in disguise. If you use
them you will be charged interest on the
amount of the check.
> Credit bureau/credit reporting agency: A
company that monitors and reports on your
credit history.
an alternative to purchasing with cash. Unlike
a credit card, however, money is immediately
deducted from your account at the time of
purchase.
> Finance charge: A charge incurred on the unpaid balance of your credit card based on the
APR.
> Late fee: A penalty fee owed for not making a
payment on the scheduled date or not paying
the minimum amount required.
> Minimum payment: The least amount you can
pay on a debt and still be in compliance with
the lender’s conditions.
> Savings account: A deposit account at a bank
or credit union for long-term saving purposes,
usually paying higher interest rates than a
checking account.
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