Credit Card Glossary

Chase's unofficial policy of automatically denying credit card applications from people who have opened 5 or more credit card accounts (from any issuer) in the past 24 months. This rule applies to most Chase cards and is one of the most important factors in card application strategy.

A premium credit card benefit that grants entry to airport lounges worldwide. Programs include Priority Pass (1,400+ lounges), Centurion Lounges (Amex), Capital One Lounges, and airline-specific lounges. Lounges offer free food, drinks, Wi-Fi, and a quiet space to work or relax.

Points, miles, or credits automatically given to you each year on your card account anniversary. For example, the Capital One Venture X provides 10,000 anniversary miles annually. This ongoing benefit helps offset the annual fee.

A yearly charge for having a credit card, typically ranging from $0 to $695. Premium cards with high annual fees usually offer valuable perks like airport lounge access, travel credits, and higher rewards rates that can offset the fee. Many no-annual-fee cards are available for those who prefer to avoid this cost.

Someone who is added to a credit card account by the primary cardholder. Authorized users receive their own card and can make purchases, but the primary cardholder is responsible for all charges. The account's history may appear on the authorized user's credit report, which can help build credit.

A feature that automatically pays your credit card bill from your bank account each month. You can typically set autopay for the minimum payment, statement balance, or a fixed amount. Autopay helps ensure you never miss a payment and damage your credit score.

The difference between your credit limit and your current balance. This is the amount you can still charge to your card. Available credit decreases as you make purchases and increases as you make payments.

A flight booked using points or miles instead of cash. Award flights can offer exceptional value, especially in premium cabins. Availability varies by airline, route, and date. Booking is typically done through the airline's loyalty program or credit card travel portal.

The period between two consecutive statement closing dates, typically 28-31 days. All transactions during this period appear on one statement. The end of a billing cycle is called the statement closing date.

A spending category that earns rewards at a higher-than-base rate. For example, a card might earn 3x points on dining, where dining is the bonus category. Some cards have permanent bonus categories; others rotate them quarterly.

A credit card designed for business owners and self-employed individuals. Offers business-relevant perks like higher spending limits, employee cards, expense tracking, and rewards on business spending categories. Business cards may not appear on personal credit reports (varies by issuer).

The legal contract between you and the credit card issuer that outlines all terms and conditions of your account, including APR, fees, rewards, and your rights and responsibilities. Also called Terms and Conditions or Card Member Agreement.

A rewards structure that returns a percentage of your purchases as cash, statement credit, or direct deposit. Cash back rates typically range from 1-6% depending on the spending category. The simplest rewards structure to understand and use.

A card that must be paid in full each month — there's no option to carry a balance. Charge cards typically have no preset spending limit. American Express is the most well-known charge card issuer. Unlike credit cards, charge cards don't charge interest (because you can't carry a balance).

When a credit card issuer writes off your debt as a loss after prolonged non-payment (typically 180 days). The debt is still owed and may be sold to a collection agency. A charge-off is one of the most damaging marks on a credit report, remaining for 7 years.

A process where a credit card issuer reverses a charge on your card, returning the money to you. Chargebacks can be initiated for fraud, billing errors, or when goods/services weren't delivered as promised. The merchant can dispute the chargeback.

The practice of repeatedly signing up for credit cards to earn sign-up bonuses, then closing or downgrading the cards. While technically allowed, issuers have rules to limit it — notably Chase's 5/24 rule. Churning can impact your credit score short-term due to hard inquiries and reduced average account age.

A credit card issued in partnership between a card issuer and a specific airline, hotel, or retailer. The card earns loyalty points in the partner's program. Examples: Delta SkyMiles cards (Amex), United Explorer Card (Chase), and Marriott Bonvoy cards.

A benefit (most commonly from Southwest Airlines) that allows a designated companion to fly with you for free (plus taxes/fees) on any flight. Often considered one of the most valuable rewards benefits, worth thousands of dollars per year for frequent travelers.

A payment method that uses NFC (Near Field Communication) technology to complete transactions by tapping your card or phone on a payment terminal. Uses the same EMV chip security. Faster than inserting a chip card.

A metric used to calculate the value of a single reward point or mile. Calculated by dividing the dollar value received by the number of points redeemed, then multiplying by 100. Higher cpp = better redemption value.

The average age of all your open credit accounts, and the age of your oldest account. Longer credit history is better for your score. This is why closing old credit cards can hurt your score — it reduces your average account age.

A company that collects and maintains consumer credit information. The three major U.S. credit bureaus are Experian, Equifax, and TransUnion. They compile credit reports and sell them to lenders, employers (with permission), and consumers.

The maximum amount of money a credit card issuer allows you to borrow on a credit card. Going over your credit limit may result in fees, declined transactions, or a lower credit score. Your credit limit is determined by factors like income, credit history, and existing debt.

A request or automatic increase to your card's maximum borrowing limit. You can often request a CLI through your issuer's app or website. Some issuers perform a soft pull (no score impact), while others do a hard pull. A higher limit can lower your credit utilization ratio.

The variety of credit account types you have, such as credit cards, auto loans, mortgages, and student loans. Having a diverse mix can positively impact your credit score (about 10% of your FICO score). However, don't open accounts just for the mix — it's a minor factor.

A detailed record of your credit history maintained by the three major credit bureaus: Experian, Equifax, and TransUnion. It includes your accounts, payment history, credit inquiries, and public records. You're entitled to one free report from each bureau annually at AnnualCreditReport.com.

A three-digit number (typically 300-850) that represents your creditworthiness based on your credit history. FICO and VantageScore are the two main scoring models. Lenders use your credit score to determine approval odds and the interest rates they'll offer you.

The percentage of your available credit that you're currently using. Calculated by dividing your total credit card balances by your total credit limits. Keeping utilization below 30% (ideally under 10%) is recommended for a healthy credit score. It's the second most important factor in your FICO score.

The total amount you owe on your credit card at any given moment, including charges, interest, and fees since your last statement. This can be higher than your statement balance if you've made new purchases.

A 3 or 4-digit security code on your credit card used for card-not-present transactions (online, phone). Visa, Mastercard, and Discover have a 3-digit CVV on the back; Amex has a 4-digit code (CID) on the front. Never share your CVV publicly.

A card linked directly to your bank checking account that deducts money immediately when you make a purchase. Unlike credit cards, debit cards don't involve borrowing or charge interest. They also lack the consumer protections and rewards that credit cards offer.

A negative item on your credit report that indicates you didn't fulfill a credit obligation. Includes late payments (30+ days), collections, charge-offs, bankruptcies, and foreclosures. Derogatory marks can remain on your report for 7-10 years and severely impact your score.

An app like Apple Pay, Google Pay, or Samsung Pay that stores your credit card information on your phone for contactless payments. Digital wallets add security through tokenization — your actual card number is never shared with the merchant.

A product change from a premium card with an annual fee to a no-annual-fee card from the same issuer. This preserves your credit history and account age while eliminating the annual fee. Common strategy when a card's benefits no longer justify its cost.

The date by which you must make at least the minimum payment to avoid late fees and potential credit score damage. By law (CARD Act), due dates must be at least 21 days after the statement closing date. Payments received after the due date are considered late.

A limit on how much you can earn at the bonus rate in a specific category. For example, '5% back on groceries up to $6,000/year.' After reaching the cap, you earn the base rate (usually 1%). Cards with no earning cap let you earn the bonus rate with no spending limit.

A microprocessor chip embedded in credit cards that generates a unique transaction code for each purchase, making it much harder to counterfeit than magnetic stripe cards. Named after Europay, Mastercard, and Visa. EMV chip cards are inserted into or tapped against a card reader.

A credit card benefit that extends the manufacturer's warranty on eligible purchases by 1-2 additional years. To qualify, the item must be purchased entirely with the card. This benefit can save you hundreds on electronics, appliances, and other warranted products.

The most widely used credit scoring model, created by Fair Isaac Corporation. FICO scores range from 300-850 and are used by 90%+ of top lenders. There are multiple FICO score versions; FICO 8 is most common for credit cards, while FICO 9 is newer.

A rewards structure that earns the same rate on all purchases regardless of category. For example, 2% cash back on everything. Simple to use — no tracking categories or activating bonuses. Popular flat-rate cards include the Citi Double Cash and Wells Fargo Active Cash.

A fee charged on purchases made in a foreign currency or processed by a foreign bank, typically 2-3% of the transaction amount. Many travel credit cards waive this fee entirely, making them ideal for international use.

A policy offered by all major credit card networks (Visa, Mastercard, Amex, Discover) that protects cardholders from unauthorized transactions. If someone uses your card fraudulently, you won't be held responsible for the charges, provided you report them promptly.

A credit check that occurs when you apply for credit (credit card, loan, mortgage). Hard inquiries can lower your credit score by 5-10 points and remain on your credit report for 2 years, though their impact diminishes after 12 months. Multiple inquiries for the same type of loan within 14-45 days are often counted as one.

A charge applied when you fail to make at least the minimum payment by the due date. As of 2026, the CFPB has capped credit card late fees at $8 (previously $30-$41). Late payments can also trigger a penalty APR and negatively impact your credit score.

A payment made after the due date. A payment 30+ days late is reported to credit bureaus and can drop your score by 60-110 points. The negative mark stays on your credit report for 7 years, though its impact lessens over time. Payments 1-29 days late may incur a late fee but aren't reported to bureaus.

The black stripe on the back of a credit card that stores your card data. Less secure than EMV chips because the data is static and can be copied (skimmed). Most card terminals in the U.S. now prefer chip or contactless payments over magnetic stripe.

A premium credit card made of metal (typically stainless steel or a metal alloy) rather than plastic. Metal cards are heavier and more durable, and they signal premium status. Common examples include the Chase Sapphire Reserve, Amex Platinum, and Apple Card.

A rewards currency similar to points, typically associated with travel-focused credit cards. Despite the name, miles don't correspond to actual flight distances. They can be redeemed for flights, hotels, and other travel, with values varying by redemption method.

The amount you must charge to a new credit card within a set time frame (typically 3-6 months) to earn the sign-up bonus. For example, 'spend $4,000 in the first 3 months.' Only net purchases count — returns, fees, and interest do not.

The rate at which you earn points or miles per dollar spent. '3x on dining' means you earn 3 points per $1 spent at restaurants. Higher multipliers are offered on bonus categories to incentivize specific spending.

A credit card that doesn't charge a yearly fee for card membership. No-annual-fee cards are ideal for those who want simple rewards without worrying about offsetting a fee. Some of the best cash back cards carry no annual fee.

A card feature that waives the typical 2-3% surcharge on purchases made in foreign currencies or processed by foreign banks. Essential for international travelers. Most travel-focused credit cards include this benefit.

A fee charged when your balance exceeds your credit limit. Under the CARD Act, issuers can only charge this fee if you've opted in to allow transactions that exceed your credit limit. Many issuers have eliminated this fee.

A record of whether you've made payments on time across all credit accounts. Payment history is the most important factor in your FICO score (35%). Even a single late payment (30+ days) can significantly damage your score and remain on your credit report for 7 years.

A rewards currency earned on credit card purchases. Points can typically be redeemed for travel, merchandise, gift cards, or statement credits. The value of a point varies by program — Chase Ultimate Rewards and Amex Membership Rewards points are generally valued at 1.5-2 cents each when transferred to airline/hotel partners.

A preliminary check by a credit card issuer to determine if you're likely to be approved, usually involving only a soft credit pull. Pre-qualification is not a guarantee of approval — you must still submit a full application, which triggers a hard inquiry.

A card loaded with a specific amount of money in advance. Unlike credit cards, prepaid cards don't involve borrowing — you can only spend what you've loaded. They don't affect or build credit. Often used for budgeting or as gifts.

The person who applied for and was approved for the credit card account. The primary cardholder is legally responsible for all charges on the account, including those made by authorized users.

Switching your existing credit card to a different card from the same issuer without closing the account or opening a new one. This preserves your credit history and avoids a hard inquiry. For example, upgrading from Chase Freedom to Chase Sapphire Preferred.

A credit card benefit that covers items you buy against damage, theft, or loss for a limited period (usually 90-120 days) after purchase. Coverage limits vary but are typically $500-$10,000 per claim. A valuable but often overlooked card benefit.

A phone number you can call after being denied a credit card to speak with an analyst who may reconsider your application. Reconsideration can succeed if you can address the issuer's concerns (e.g., moving credit from another card, clarifying income). Each major issuer has its own reconsideration number.

The monetary worth you get per point or mile when redeeming rewards. Expressed in cents per point (cpp). For example, redeeming 50,000 points for a $750 flight equals 1.5 cpp. Transfer to airline partners often yields 1.5-3+ cpp, while cash back typically yields 1 cpp.

A fee charged when your payment to the credit card company is returned (bounced) due to insufficient funds in your bank account. Typically $25-$40. Also called a bounced payment fee.

Bonus spending categories that change quarterly (every 3 months) on certain credit cards. Cards like Discover it and Chase Freedom Flex offer 5% cash back in rotating categories that must be activated each quarter. Categories might include gas stations, grocery stores, restaurants, or Amazon.

A credit card that requires a refundable security deposit (usually $200-$500) that typically serves as your credit limit. Designed for people building or rebuilding credit. After demonstrating responsible use, you can often upgrade to an unsecured card and get your deposit back.

A one-time reward offered to new cardholders who meet a minimum spending requirement within a specified time period (usually 3-6 months). Sign-up bonuses are often the most valuable feature of a new credit card, sometimes worth $500-$1,500+.

The practice of keeping an old credit card open but not actively using it. This preserves your credit age and available credit. Put a small recurring charge on it (like a subscription) to prevent the issuer from closing it for inactivity.

A credit check that does NOT affect your credit score. Examples include checking your own credit, pre-qualification offers, and employment background checks. Soft inquiries don't appear to lenders reviewing your credit report.

The total amount you owe at the end of a billing cycle, as shown on your monthly statement. Paying the full statement balance by the due date avoids interest charges on purchases. This is different from your current balance, which includes transactions after the statement closed.

A rewards redemption method that applies your points or cash back as a credit to reduce your card balance. While convenient, statement credits often provide lower value per point compared to travel transfers. Some cards offer specific statement credits for travel or dining purchases.

A credit card issued by a specific retailer that can typically only be used at that store (closed-loop). Some stores offer co-branded cards on major networks (open-loop) that can be used anywhere. Store cards often have higher APRs but offer store-specific discounts and rewards.

A credit card designed for college students with limited or no credit history. Typically features easier approval requirements, lower credit limits, and student-oriented perks. A great way for students to start building credit responsibly.

A security technology that replaces your actual card number with a unique digital token for each transaction. If the token is stolen, it's useless to fraudsters because it can't be used for other transactions. Used by digital wallets and online payment systems.

Airlines and hotel loyalty programs to which you can transfer your credit card points or miles, often at a 1:1 ratio. Transferring to partners usually yields the highest value per point. Chase, Amex, Capital One, and Citi all have transfer partner programs.

A credit card optimized for travelers, offering benefits like airline miles or travel points, no foreign transaction fees, airport lounge access, travel insurance, and travel statement credits. Annual fees range from $0 to $695, with premium cards offering the most perks.

An online booking platform offered by credit card issuers (like Chase Travel or Amex Travel) where you can use points to book flights, hotels, and rental cars. Some portals offer enhanced point values — for example, Chase Sapphire Reserve provides 1.5 cpp through the Chase Travel portal.

A standard credit card that doesn't require a security deposit. Most credit cards are unsecured. Approval is based on your creditworthiness, income, and other financial factors. Generally requires fair to excellent credit.

A credit scoring model created by the three major credit bureaus (Experian, Equifax, TransUnion) as an alternative to FICO. Ranges from 300-850. Often the free score provided by credit card issuers and apps, though most lenders still use FICO for decisions.

Another term for a sign-up bonus. The initial reward offered to new cardholders upon meeting spending requirements. Issuers may use different terminology, but the concept is the same.