|
|
|
| |
Glossary
| |
| A |
Affinity Credit
Card:
A credit card which is sponsored
by two or more organizations.
Age Requirement:
To qualify for credit the
card issuing company sets an age limit. In most
of the companies you must be at least 18 years
old to obtain a credit card.
Annual Fee:
Some
credit card companies charge an annual fee; it
is the yearly cost you pay to use the
card.
Annual
Percentage Rate (APR):
The annual
percentage rate a measure of the cost of credit
expressed as a yearly rate. When you open a
credit card account, you agree to pay a
percentage of the outstanding balance each month
as a finance charge.
Application:
A
form used to apply for credit.
Asset:
Cash or anything
you own that can be turned into cash. This
includes property, goods, savings or
investments.
ATM:
Automated Teller Machine.
Available
Credit:
Available credit is your credit
limit minus your current balance. It is the
unused portion of your credit line.
Average Daily
Balance:
The average daily balance is a
common way card issuers calculate finance
charges. The credit card company finds the
balance each day of the billing period, adds the
daily balances together and divides by the
number of days in the period. The calculation
includes new purchases and payments. You should
refer to your credit card issuer's Cardmember
Agreement for specific information and details
regarding the calculation of the Average Daily
Balance.
|
|
|
Bad
Credit:
The total amount
you owe the issuer
including any
unpaid balance
from last month,
new purchases,
cash advances,
and any other
charges such as
an annual fee,
late fees or finance
charges. The "Amount
I Owe" should
not be confused
with the minimum
amount due (the
minimum payment
allowed each month).
Balance/Amount Owed:
The total amount
you owe the issuer
including any
unpaid balance
from last month,
new purchases,
cash advances,
and any other
charges such as
an annual fee,
late fees or finance
charges. The "Amount
I Owe" should
not be confused
with the minimum
amount due (the
minimum payment
allowed each month).
Balance
Calculation Method:
Balance Calculation
Method is the
method used by
a credit card
issuer to calculate
the balance owed
and the interest
due each month.
Balance Transfer:
Transferring balances
from one credit
card to another,
usually to take
advantage of a
lower interest
rate. Transfers
are limited to
the available
credit on the
receiving card.
Bankruptcy:
Bankruptcy is
a legal declaration
of your inability
to repay your
debts. Bankruptcy
should be viewed
as a last resort.
|
|
Billing Cycle:
The number of
days between your
last statement
date and your
current statement
date.
Billing Statement:
A monthly bill
from your credit
card issuer which
describes and
summarizes the
activity on your
account including
the outstanding
balance, purchases,
payments, credits,
finance charges
and other transactions
for the month.
Borrower:
The person who
signs and agrees
to the terms of
a promissory note
and is responsible
for repaying the
loan.
Budget:
The financial
record you use
to keep track
of the money you
earn, how much
you spend and
what you spend
it on. Your budget
also includes
savings and how
much you pay to
your creditors.
|
|
|
|
Cardmember Agreement:
The issuer's terms
and conditions
relating to your
credit card account.
The Cardmember
Agreement is between
the customer and
the card issuing
company and is
a legal document.
When you sign
up for a credit
card understand
the Terms and
Conditions.
Cash Advance:
A cash withdrawal
at an automated
teller machine,
bank teller or
by use of a convenience
check. This cash
is an instant
loan from your
credit card account.
The credit card
company will apply
finance charges
from the day you
take the advance
until the day
you pay it off.
A transaction
fee may also be
charged based
on the amount
of your withdrawal.
Cash Advance Fee:
A one-time fee
for cash advances
in addition to
normal finance
charges. This
fee is usually
a percentage of
the advance amount.
Charge
Card:
A card that requires
full payment of
the balance before
the end of the
billing period.
It is not a line
of credit and
no interest is
charged.
Collateral:
An asset pledged
to a lender to
guarantee repayment.
Collateral could
include savings,
bonds, insurance
policies, jewelry,
property or other
items that are
pledged to pay
off a loan if
payments are not
made according
to the contract.
Collateral is
not required for
unsecured credit
card accounts.
Collection:
The referral of
a past due account
to a specialist
in collecting
loans or accounts
receivable.
Consolidation Loan:
If you owe money
to several creditors,
you can combine
your payments
and balances into
a single account
with one creditor.
This can be done
in several ways.
For example, you
can transfer several
high interest
credit card balances
onto one card
with a lower rate.
If you own a home,
you can consolidate
your debt with
a low-interest
home equity loan.
Or, you can get
a loan specifically
designed for this
purpose.
Co-sign:
To sign a credit
agreement with
someone and agree
to share the debt
with that person
or assume the
debt if the other
person defaults
and doesn't pay.
Co-signer:
A co-signer is
a person who signs
a loan or credit
card with the
primary applicant,
pledging to be
responsible for
repaying the loan
or debt in the
event the applicant
is unable.
Credit:
An amount of money
that a bank or
credit card issuer
lends to you.
You can charge/spend
any amount from
your credit line
to make purchases
or take cash advances.
As long as you
pay the minimum
amount due each
month by the due
date, you can
continue to use
your remaining
available credit.
Credit Bureau:
A credit bureau
is a company that
collects and shares
information about
how you manage
your credit. Many
banks and credit
issuers regularly
update the credit
bureaus about
your payment habits
and how much money
you owe. Potential
creditors may
check your credit
report when you
apply for a loan
or a credit card.
Credit Card Debt:
The total unpaid
balances on all
of your credit
cards (not to
be confused with
the minimum amount
you owe each month).
Credit Criteria:
Factors used by
lenders to rate
the credit worthiness
or ability to
repay debt. They
may include the
following: income,
amount of personal
debt carried,
number of accounts
from other credit
sources and credit
history. A lender
is free to use
any credit-related
information in
approving or denying
a credit application.
Credit History:
Your credit history
is a record of
the way you manage
your debt. It
is kept by the
credit bureaus
in the form of
a credit report.
Banks and credit
card issuers tell
the credit bureaus
about how you
pay your debts.
When you apply
for new credit
or a loan, the
bank will check
your credit history
before granting
any credit. Information
such as missed
or late payments
will be on your
credit report
for a pre defined
time period.
Credit Available:
The amount of
unused credit
that is available.
Your credit available
is your outstanding
balance subtracted
from your total
credit line. For
example, if your
credit line is
L.E. 50,000 and
you have an outstanding
balance of L.E.
40,000, your credit
available is L.E.
10,000, which
means that you
have L.E. 10,000
of credit left
that you can use
to make purchases
with your credit
card.
Credit Management:
The way you handle
the money you
borrow from banks
or credit issuers.
For example, wise
consumers will
pay more than
the minimum due
each month by
the due date.
Credit
Report:
A credit report
is a record of
all of the information
that credit bureaus
have collected
about the way
you've managed
your finances
. It is the official
record of how
you pay the money
you owe to your
creditors. It
includes the names
of companies that
have lent you
money, your current
account balances,
and the timeliness
of your payments.
The information
on your report
can either qualify
or disqualify
you from obtaining
credit cards,
mortgages, loans
or car.
Credit-worthy:
You are judged
to be qualified
to have credit.
|
|
|
|
Daily Periodic Rate:
The interest rate
factor used to
calculate the
interest charges
on a daily basis.
The factor is
computed by dividing
the yearly rate
by 365 days.
Debit Card:
When you make
a purchase with
a debit card,
money is deducted
directly from
your bank deposit
account. You can
spend only the
amount of money
you have in your
bank deposit account
when you use your
debit card.
Debt:
An amount of money
you owe to banks
or credit issuers.
More specifically,
it is the amount
of money that
you have borrowed
and not paid back.
Debt Ratio/Debt Burden:
An amount of money
you owe to banks
or credit issuers.
It is the percentage
of your income
that goes to paying
your debts every
month. Debt ratio
usually gives
a clear picture
of your overall
financial well-being.
To calculate your
debt ratio, first
add up all your
monthly income
including take-home
pay (after taxes),
Social Security
or disability
benefits and alimony.
Then add up all
your monthly payments
for interest bearing
loans and accounts,
such as mortgages,
student loans,
credit cards and
car loans. If
you rent your
home, include
that amount, but
do not include
utilities and
telephone charges
because they can
vary on a monthly
basis. Finally,
divide your monthly
payments by your
income. Multiply
the result by
100 and that number
is your debt ratio
percentage.
- A low ratio
is under 20%,
which means
that you are
in good financial
health and
are doing
a good job
of managing
your money.
- A moderate
ratio is between
21% and 40%.
This means
that you should
look carefully
at your monthly
payments and
start decreasing
your overall
level of debt,
including
credit cards.
- A high debt
burden is
over 40%.
You should
immediately
stop accumulating
debt and start
looking for
ways to decrease
your debt
or increase
your income.
Default:
Failure to repay
a loan according
to the agreed
upon terms.
Deferred Payment:
Payments put
off to a future
date or extended
over a period
of time. Interest
will usually
still accumulate
during deferment.
Delinquency
Assessment/Late
Fee:
A fee that is
charged for
a late payment.
Delinquency:
When loan payments
are not paid
according to
the terms of
the agreement/promissory
note. Late fees
are often assessed
on delinquent
accounts, and
delinquency
results in default.
Disclosure Statement:
A disclosure
statement details
the actual cost
of a loan, including
all estimated
interest costs
and loan fees.
For credit card
accounts, this
information
may be found
in the Cardmember
Agreement.
Dispute:
If you think
your bill is
wrong, write
to your credit
card issuer
at the address
listed on your
statement. You
must write no
later than 60
days after you
received the
first statement
where the error
appeared.
Due
Date:
The day a payment
is due to a
creditor. After
that date, a
late fee can
be charged,
the payment
can be recorded
as late, and
the account
can be considered
delinquent.
|
|
|
|
EMI: Equated Monthly
installments are the combination of principle
plus interest that you service for any loans
including loans taken on your credit card
ECS: Electronic Clearing
Facility: An inter bank arrangement where by a
customer can give instructions to his bank where
he holds a current or savings account to pay the
monthly instalments of payments due on
loans/credit cards held with another
bank.
|
|
|
Grace Period:
If you do NOT
have an outstanding
revolving balance
on your credit
card, a grace
period is the
interest-free
time period between
the date of your
purchase and when
the purchase appears
on your statement.
For example, if
you pay off your
balance in full
on June 1st and
then buy an item
on June 2nd, you
will not be charged
interest for the
time period between
June 2nd and your
next statement.
If you carry a
balance on your
credit card from
month to month,
you do not have
a grace period.
You are charged
interest immediately
when you make
a purchase.
|
|
|
|
Household Income:
Income from all
sources including
wages, commissions,
bonuses, dividends
and interest.
Look at your last
income tax return
for your income
sources.
|
|
|
|
Installment Loan:
A loan that you
promise to pay
back by paying
the same amount
of money on a
regular basis,
usually monthly,
for a specific
amount of time.
Interest
Rate:
The rate that
a bank or credit
issuer charges
for the money
it lends to you.
|
|
|
|
Late Payment:
Most charge and
credit card bills
list the date
by which payments
are due. If you
miss the due date,
the account is
considered past
due and you may
be charged a late
fee. Late payments
may be reflected
on your credit
report. If you
have paid late
numerous times,
it may be difficult
to get additional
credit.
Late Payment Fee:
A fee charged
for failing to
submit the minimum
monthly payment
by its due date.
Legal
Judgment:
A court verdict
that requires
a person to do
something, such
as pay a debt.
Liability:
Liability is the
responsibility
for a loan or
credit account.
When applying
for credit, a
Cardmember agrees
to be liable for
any charges to
his or her account,
including purchases,
fees and finance
charges. Your
liability is described
in the Cardmember
Agreement you
receive from the
issuer.
|
|
|
|
Minimum Amount
Due/Minimum Payment:
The smallest amount
you can pay by
the due date and
still meet the
terms of your
card agreement.
|
|
|
|
Non-taxable Income:
Money you earn
that is not taxed
by the central,
state, or local
government. |
|
|
|
Outstanding Balance:
The total amount
that you owe on
a credit card
or other loan.
Over the Credit
Limit:
When the amount
you owe is more
than the limit
on your credit
line. Any combination
of purchases,
cash advances,
fees or finance
charges may cause
you to exceed
your credit limit.
For example, you
will be over the
credit limit if
you spend L.E.
20,000 when you
have L.E.10,000
of your credit
line left. If
you go over your
credit limit,
you will be charged
an extra fee each
month until the
amount of money
you owe is less
than or equal
to your credit
line.
Over-the-Limit
Fee:
A charge imposed
for exceeding
the assigned credit
limit.
|
|
|
|
Past Due:
The status of
an account when
the minimum payment
has not been received
by the due date.
Periodic Rate:
The interest rate
described in relation
to a specific
amount of time.
For example, the
monthly periodic
rate is the cost
of credit per
month; the daily
periodic rate
is the cost of
credit per day.
PIN:
Abbreviation for
Personal Identification
Number, the number
used as an access
code to ATMs or
Internet banking.
Posting Date:
The date that
a purchase, cash
advance, fee,
service charge
or payment is
recorded on your
charge or credit
account.
Pre-Approved Credit:
Credit card or
a line of credit
that is approved
based upon available
data without further
information supplied
by the potential
Cardmember.
Prepayment:
When a portion
or the entire
amount of the
principal of a
loan is paid before
it is due. This
will usually reduce
the total amount
of interest that
must be paid.
Previous Balance:
The total balance
due at the end
of the last billing
cycle.
Prime Rate:
The Prime Rate
is the interest
rate that Reserve
Bank of India
indicates for
charging on loans
offered by banks.
Principal:
Principal is the
portion of a loan
that represents
the actual amount
of money borrowed.
Principal is separate
from interest.
In terms of credit
cards, principal
represents the
price of purchased
items or the amount
of a cash advance.
Promissory Note:
A promissory note
is a binding legal
document that
a borrower signs
to obtain a loan.
It lists your
rights and responsibilities
under the loan
agreement, including
how and when the
loan must be repaid.
Rights and responsibilities
for credit card
accounts are listed
in the Cardmember
Agreement.
|
|
|
|
Quarterly:
Quarterly divides
the year into
four parts. In
a calendar year,
the first quarter
is January through
March, second
quarter is April
through June,
third quarter
is July through
September, and
fourth quarter
is October through
December.
|
|
|
|
Reward points:
A loyalty scheme
that supplies
benefits based
upon the card's
usage. Benefits
are usually in
the form of points
that can be redeemed
for gift vouchers,
gift items or
services, such
as airline tickets,
discounts on purchases
or cash refunds.
The credits accumulated
toward these benefits
are often a percentage
of each purchase.
Reference:
A person who can
vouch for your
reliability, employment
history or other
factor needed
to determine your
creditworthiness.
Revolving Credit:
A credit agreement
that allows consumers
to pay all or
part of the outstanding
balance on a loan
or credit card.
As credit is paid
off, it becomes
available again
to use for another
purchase or cash
advance.
|
|
|
|
Secured Card:
A credit card
that is guaranteed
by a cash deposit
held in a special
savings account
or certificate
of deposit. The
deposit must remain
in the account
until the credit
line is closed
or the issuer
decides security
is no longer necessary.
The credit line
on the card is
usually equal
to the amount
of the deposit.
If the Cardmember
defaults on the
card, the issuer
will apply the
deposit toward
the outstanding
balance.
Secured Debt:
Debt for which
repayment is guaranteed
through collateral
property of equal
or greater value
than the amount
of the loan. If
you do not repay
the loan, the
issuer may take
possession of
the collateral.
Collateral may
be an asset such
as a car or a
home or, in the
case of a secured
credit card, a
cash deposit held
by the issuer.
For example, a
mortgage is a
secured debt in
which the home
is collateral.
If the person
fails to repay
the loan, the
bank may take
the home as payment.
Semi-Annually:
Twice a year.
Signs of Trouble:
Situations or
events that suggest
you may be having
financial difficulty.
For example, a
sign of trouble
could be that
you use your credit
card to pay for
groceries because
you have no money
in your checking
or savings account.
Other signs of
trouble include
paying only the
minimum due on
your credit cards,
using one credit
card to pay the
monthly minimum
on another card
and routinely
having "maxed
out" credit cards.
Standing Instructions:
The Instructions
you give your
banker to debit
your savings or
current account
to pay your credit
card account,
the minimum due/full
amount due or
any fixed amount
each month.
|
|
|
|
Taxable Income:
Any money you
earn or receive
- such as salary,
bonuses or interest
from investments
- that can be
taxed by the Federal,
state, or local
government.
Transaction Date:
The date a purchase
is made or cash
is withdrawn.
Some companies
assess interest
from the transaction
date, others from
the posting date.
Transaction Fee:
An extra charge
for various credit
activities such
as using an ATM
or receiving a
cash advance.
|
|
|
|
Unsecured Debt:
This is debt that
is not guaranteed
by collateral,
therefore, no
assets are committed
in the event of
default. If the
issuer is unable
to collect on
the loan, its
value is lost.
Most credit cards
are unsecured.
As the Cardmember's
promise is the
only guarantee,
credit card issuers
require more information
regarding income
and credit history
than with a secured
loan.
|
|
|
|
Variable Expenses:
Variable expenses
are those that
can change from
month to month.
Variable expenses
include necessities
that can be reduced
(such as food
and utilities)
and non-essentials
that could be
eliminated (e.g.,
long distance
charges, cable,
magazine subscriptions,
etc). Reducing
these expenses
is the simplest
step in getting
control of your
finances.
Variable Interest
Rate:
An interest rate
that is not fixed
but can vary within
a pre-fixed band
by the loan issuing
bank. For example
some credit card
issuers charge
variable Interest
rate on the outstanding
un-paid balance
depending upon
the credit score
or credit behaviour/payment
pattern of the
customer.
|
|
|
|
Zero Balance:
Zero balance is
when the total
outstanding balance
is paid and there
are no new charges
or cash advances
during a billing
cycle.
|
|
|
|
|
|
|
 |
| |
The content provided in this section
is for general information purposes only and does not constitute
financial advice or any other kind of advice. You must obtain
specific advice about your specific circumstances from your
own financial advisor and/or other advisors. 