Credit Card Glossary
Cardholder
The borrower, named on the Credit Card.
Credit Card
A line of credit that enables a borrower to use up to the set limit, pay down the balance, and borrow funds again. Credit cards are considered a revolving line of credit.
Credit Limit
A set dollar amount of money that a member qualifies to use.
Statement Cycle
The period of time that a statement is generated for.
Statement Balance
The balance as of the last day of the statement cycle.
Carrying a Balance
When a statement isn’t paid off in full, and the balance carries over to the next statement cycle.
Interest or Finance Charges
Interest that is accrued monthly when a statement balance isn’t paid off in full.
Annual Fee
A yearly fee that may be charged to the borrower or cardholder. Not all cards assess an annual fee.
Budget
A written plan that guides how a consumer manages income and expenses.
Debt Snowball
A strategy to pay off debt, outlined below.
- Create a working budget.
- Establish a dollar amount to apply to your debt each month. This should be the total of all of your minimum payments, plus an additional amount.
- Determine which account to target first. Your targeted account should have the lowest balance or the highest interest rate.
- Make the minimum payment on all your debts, with all additional funds going to the targeted account.
- Once the targeted account is paid off, choose a new target.