Glossary
A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z
The following terms, organised alphabetically, are either mentioned in the text available on or throughout this website, or are otherwise of relevance to credit cards. We thought we'd give you the formal definitions to make things absolutely clear.
- Acquirer
- A bank having a business relationship with merchants, retailers and other service providers to process their plastic card transactions. Acquirers obtain financial settlement for the card issuers, typically via the card schemes, which maintain the clearing systems, and pay the proceeds to the merchant, charging a fee.
- Additional Cardholder
- Where there is more than one credit cardholder for any particular credit card account anyone who is not the primary account holder is an additional cardholder. All purchases will be shown on the account holders' statement and will be itemised. It will be the primary account holders' responsibility to make the necessary payments.
- Affinity Cards
- A payment card issued on the basis that the card issuer makes a donation to a particular organisation (often a charity).
- American Express
- An international card scheme.
- Annual Fee
- A fee charged by some card issuers to cover costs incurred maintaining an account and supplementary services.
- Annual Percentage Rate (APR)
- The interest charged on purchases over one year, expressed as a percentage
of the amount borrowed. It includes the interest to be paid on the amount
borrowed and other compulsory non-interest costs (for example annual fees).
The APR does not include any avoidable charges such as late payment fees.
Companies that advertise loans or credit cards are required to state what the APR rate is. This enables borrowers to compare rates and to see the true rate of interest repayment they would incur over a full year.
- Assets
- Anything that belongs to you that may be used to pay your debts.
- ATM (Automated Teller Machine)
- Also known as a cash machine or cash dispenser. A computerised self-service machine permitting the holders of an appropriate card and personal identification number (PIN) to withdraw cash from their account and access other banking services.
- Balance
- The total outstanding amount or positive amount on an account. The outstanding balance on a credit card includes borrowing for purchases, cash advances, balance transfers and any interest incurred.
- Balance Transfer
- Where the credit from one credit card account is used to pay off part or all of another debt. The total transfer amount cannot exceed the credit limit of the account that the payment is transferred to. Often credit cardholders will request a balance transfer to take advantage of a promotional or preferential rate on a new or existing account.
- Banking Code
- The voluntary code that sets standards of good practice for financial institutions, including credit card companies, to follow when they are dealing with customers.
- Banking Code Standards Board
- The organisation, the directors of which include a majority of independent members as well as representatives of financial institutions, that monitors the Banking Code.
- Bank of England (BoE) Base Rate
- see Base Rate.
- Bank Statement
- A record prepared by a financial institution, usually posted to a customer once a month, that lists all transactions for an account, including deposits, withdrawals, electronic transfers, fees and other charges, and interest incurred or earned. The statement is usually posted to the customer and/or is available online.
- Bankruptcy Restriction Order
-
If the official receiver considers that the conduct of a bankrupt has been dishonest or blameworthy in some other way, he (or she) will report the facts to court and ask for a Bankruptcy Restriction Order to be made.
The court will consider this report and any other evidence put before it, and decide whether it should make a BRO. If it does, you will be subject to certain restrictions for the period stated in the order. This can be from 2 to 15 years. - Base Rate
- The underlying interest rate that is used as an index for pricing variable rate loans on products such as credit cards. It is set by the Bank of England and reviewed every month - the results of this review are announced publicly.
- Billing Cycle
- The length of time between credit card statements. Credit card billing cycles are typically around one month in length.
- Black Card
- see Premier Card.
- Business Card
- A payment card issued, typically to smaller businesses, for staff to undertake general business-related spending (see also Corporate Card).
- Card
- A general term for any payment card that is used to pay for goods and services or to withdraw cash. This includes credit cards, charge cards, debit cards, cheque guarantee cards and cash cards.
- Card-not-present (CNP)
- A transaction where the merchant, retailer or other service provider does not have physical access to the payment card. Examples are transactions by telephone, mail order or Internet.
- Card-remotely-present
- A transaction where the merchant, retailer or other service provider does not have physical access to the payment card, but where the card is inserted in a device by the customer and the card details are verified by an electronic process. Examples are transaction at unattended payment terminals, by telephones equipped with card readers or via the Internet when a card reader is in use.
- Card Issuer
- A bank, building society or other organisation issuing payment cards, ATM cards or cheque guarantee cards to it customers. For payment and ATM-only cards the card issuer undertakes responsibility to settle transactions made with the card (except in some cases where fraud has occurred).
- Card Protection Agencies
- A business that provides cardholders with a card number registration service. In the event that a card is lost or stolen, the cardholder can contact the CPA who will, on their behalf, advise the card issuer so that a 'stop' can be placed against that card number. CPAs may also provide a registration service for a wide range of other personal items and documents.
- Card Scheme(s)
- Card schemes set the business rules that govern the issue of the payment cards that carry their logo. Typically these rules apply throughout the world to ensure that a cardholders card can be used anywhere. In many countries, domestic schemes also operate. The schemes operate the clearing and settlement of payment card transactions. In the UK, banks and building societies must be members of the appropriate scheme to issue cards and acquire card transactions. Examples of international card schemes are Visa, MasterCard, American Express, Diners Club International and JCB.
- Cash Advance
- An advance that draws directly against a cardholders' credit line, where the service is available.
- Cash Dispenser
- see ATM.
- Cash Machine
- see ATM.
- Charge Card
- A payment card that allows a cardholder to make purchases and to draw cash up to a pre-arranged credit limit. The terms include the obligation to pay the account in full at the end of a specified period. Cardholders are normally charged an annual fee.
- Charging Order
- A court order placing restrictions on the disposal of certain assets, such as property or securities, given after judgement and gives priority of payment over other creditors.
- Chip Card
- Also known as an integrated circuit card (ICC) or smart card. A chip card holds details on a secure computer chip that can store and process information. Chip cards usually also have a magnetic stripe. With the advent of chip and PIN, the older cards are sometimes referred to as 'chip and signature' cards.
- Chip & PIN Card
- A payment card containing a chip that requires use of a PIN as the preferred method of cardholder verification at the point-of-sale and at cash machines.
- Cirrus
- A MasterCard brand enabling a cardholder to obtain cash at a cash machine.
- Co-branded Card
- A payment card issued by an organisation in partnership with another, often non-financial, institution (usually one which has a well-known brand name) bearing the brand / logo of both. The non-financial institution offers certain benefits to cardholders, often using a points system.
- Commercial Card
- A generic term covering business, corporate and purchasing cards.
- Consumer Credit Act 1974
- The legislation that regulates the consumer credit market in the UK, including credit cards.
- Corporate Card
- A payment card typically issued to larger companies for staff to make business-related transactions, for example travel and entertainment (see also Business Card).
- Credit
- A contractual agreement in which a borrower receives money, with the agreement to repay the lender at some date in the future in accordance with agreed terms and conditions. Credit is also used to mean a positive balance on an account. For instance, an account may be credited with interest.
- Credit Card
- A payment card enabling the holder to make purchases and to draw cash up to a pre-arranged limit. The credit granted can be settled in full by the end of a specific period or can be settled in part, in which case interest is normally charged. In the case of cash withdrawals, interest is normally charged from the transaction date. Cardholders may be charged an annual fee.
- Credit Card Cheque
- A cheque drawn against a credit card account that gives the cardholder another way of accessing funds - up to their credit limit - usually to make transactions where credit cards are not accepted. Interest is normally charged from the transaction date.
- Credit History
- A partial profile of how an individual has paid credit accounts in the past, given within a particular time frame (usually measured in years). It is used as a guide to determine whether or not the applicant is likely to pay future accounts on time, and is used by credit card issuers to decide whether to provide customers with a credit card, and as a guide to set the credit limit on a credit card account (see also Credit Record).
- Credit Limit
- The maximum amount of credit issued by a lender. Under some circumstances, a credit card issuer may increase or decrease a credit limit.
- Credit Rating
- A rating used by banks, insurance companies, mortgage companies and other financial institutions making loans, which is used to judge an individual or company's creditworthiness. Credit Reference Agencies provide credit data to financial institutions that use this data, along with other information about a customer, to give points based on how it compares to people who pay their bills and loans on time. The more positively a customer's behaviour compares to those people who pay on time, the higher that customer's score and overall credit rating will be.
- Credit Record
- The information held about a cardholder, by a credit reference agency, concerning that cardholder's financial status (see also Credit History).
- Credit Reference Agency (CRAs)
- An organisation, licensed under the Consumer Credit Act 1974, that holds information about the borrowing habits of people. Financial institutions may contact these agencies for information to help them make various decisions, for example, whether or not to open an account or provide loans or grant credit. Financial institutions share information with the agencies to improve the overall quality of lending decisions.
- Credit Risk
- The likelihood of a consumer to pay back an outstanding debt.
- Creditworthiness
- A measure of a consumer's past credit behaviour that allows a potential lender to decide whether or not to extend credit to that consumer.
- Debit
- A charge to or withdrawal from a customer's account. Transactions, such as payment by cheque, cash machine withdrawals or credit card purchases in a shop, will debit money from an account.
- Debt
- An amount of money borrowed and owed by one party to another.
- Debit card
- A payment card linked to a bank or a building society account, used to pay for goods and services by debiting the holder's account. It usually comes with other facilities such as cash machine and cheque guarantee functions.
- Diners Club
- An international card scheme.
- Discharged
- When a bankrupt person is legally free of any obligation to repay certain debts.
- EMV
- The internationally-agreed standard for chip payment cards, originally agreed by Europay, MasterCard and Visa. EMV standards are maintained by EMVCo, an organisation owned and managed by MasterCard, Visa and JCB.
- Gold Card
- see Premier Card.
- Grace Period
- The period of time during which interest will not be charged on any purchases made. In the UK this is usually between 40 and 59 days. If the credit card account balance is settled in full for the total outstanding amount inside of this period no interest will be charged (see also Interest Free Period).
- Interest
- The charge a borrower will pay if they borrow money, and the income an
investor will receive if they lend money or invest it in an income-producing
bank account or in a security like a bond or a gilt.
For example if someone borrows £1,000 at an interest rate of 10% per year, the interest payable is £100 per year. Loans are sometimes made at fixed rates of interest, and sometimes at variable rates.
- Interest Free Period
- The period of time a customer may be given to pay the outstanding balance in full on their latest statement before interest is charged.
- Interest Rate
- The percentage rate at which interest is charged on money that is borrowed or invested. It is expressed as a percentage of the amount borrowed or invested, usually over one year, but could be over one month.
- Insolvency Practitioner
- An Insolvency Practitioner is an authorised person who specialises in insolvency, usually an accountant or solicitor. They are authorised either by the Secretary of State or by one of a number of recognised professional bodies. Your local court can give you names of local practitioners, or a list is also available from your local Official Receiver’s office.
- Issuer
- The credit card company or financial institution that issues a credit card to a cardholder.
- JCB
- An international card scheme.
- Lender
- A person or company that offers to lend money to a borrower. The borrower is obliged to repay the loan either by installments or a single payment together with specified interest.
- Line of Credit
- The total amount of credit available to a borrower. Purchases and withdrawals will not be possible beyond this limit.
- Maestro
- A MasterCard debit card scheme enabling cardholders to make payments to participating merchants in the scheme.
- MasterCard
- An international card scheme.
- Merchant
- A place or shop where purchases are made, including those on the Internet.
- Minimum Payment
- The minimum amount that a cardholder must pay, if there is an outstanding balance on their account, to their credit card issuer each month. The amount is usually expressed as a percentage and will vary depending on the outstanding balance.
- MO/TO
- An acronym for mail order/telephone order that refers to card-not-present transactions.
- Multi-function card
- A payment card fulfilling two or more roles, typically a debit card also providing ATM and/or cheque guarantee functions.
- Nominee
- A Nominee is a person or firm into whose name securities or other properties are transferred in order to facilitate transactions, while leaving the customer as the actual owner. Anyone who is in financial difficulties and thinks he is about to be made bankrupt, or is already bankrupt, may ask a Licensed Insolvency Practitioner to act as Nominee. The debtor will present a proposed contract between himself and his creditors, (although in practice this is normally written with the assistance of the Practitioner) to the Nominee.
- Official Receiver
- The Official Receiver is a civil servant in The Insolvency Service and an officer of the court. He (or she) will be notified by the court of a bankruptcy or winding-up order. He will then be responsible through his staff for administering the initial stage, at least, of the insolvency case. This stage includes collecting and protecting any assets and investigating the causes of the bankruptcy or winding up.
- Payment Card
- A generic term for any plastic card (such as credit, debit and charge cards) used to pay for goods and services.
- Payment Protection Insurance (PPI)
- An additional monthly insurance premium, based on the outstanding balance on a credit card, that provides a cardholder with protection in the event of illness, disability or unemployment. Cardholders should always check that this sort of product is appropriate to their personal circumstances.
- Personal Identification Number (PIN)
- A set of characters, usually a four-digit sequence, used by a cardholder to verify their identity at a point-of-sale or at a customer-activated device such as a cash machine. The number is generated by the card issuer when the card is first issued and may be changed by the cardholder thereafter.
- PIN
- See Personal Identification Number
- Platinum Card
- see Premier Card.
- Point-of-sale(POS)
- A physical location where a customer makes a purchase.
- POS Terminal
- An electronic device used to process card payments at point-of-sale.
- POS Transaction
- A transaction taking place at point-of-sale.
- Premier Card
- A credit or charge card, usually with a higher credit limit than a standard or classic card, and sometimes providing a wider range of benefits such as travel insurance. Includes gold, platinum and black cards.
- Pro-rata
- Pro-rata is an expression used to describe a proportionate allocation. Once you have worked out how much disposable income you have each month, you calculate how much you can pay each creditor.
- Retailer Card (also known as a store card)
- A plastic payment card issued by a specific retailer or group of retailers for limited use at their own outlets.
- Recurring Transaction
- An authority to charge a transaction to a credit or charge card at regular intervals (typically monthly), granted by the cardholder to a merchant, retailer or other service provider. The term 'recurring transaction' may apply equally to one of the transactions or to the authority under which these are charged. Also sometimes known as a Continuous Authority Transaction.
- Remote Transaction
- see card-not-present and card-remotely-present.
- Section 75
- A provision within the Consumer Credit Act 1974. This makes a cardholder's credit card company jointly liable with the merchant for any purchases made on a credit card. For example, if a merchant goes bankrupt then a cardholder would have no way to get their money back if there was a problem with a service or product provided by that merchant. But if the cardholder paid for the product or service with a credit card then the credit card company would also be responsible for putting right any losses.
- Secured Credit
- Secured credit is an extension of credit that is secured with collateral of some type (car loans and mortgages for example). If you don’t meet your payment obligations, the item securing the loan or extension of credit can be foreclosed on or repossessed.
- Store Card
- A payment card limited in its use to a specified retailer or group of retailers. Some cards include the facility to withdraw cash from cash machines. Also sometimes known as a Retailer Card.
- Summary Box
- A standard format for providing a brief summary of the key features of a credit card, which is available on all credit card marketing materials and credit card statements. A Summary Box can be used to easily compare different products and to remind cardholders of the features of their credit cards.
- Supervisor
- On approval of a debtor's proposal the Nominee is usually appointed as Supervisor, unless the creditors at the meeting have voted otherwise. The Licensed Insolvency Practitioner will act as Supervisor throughout the duration of the Individual Voluntary Arrangement. The Supervisor will abide by the terms of the proposal and normally will work in a number of different ways to assist the debtor in coming to terms with his basic situation.
- Transaction
- Any agreement between two or more parties that establishes a legal obligation, and the act of carrying out such an obligation. Also, action between a cardholder and a merchant or a cardholder and a credit card company that results in activity on the cardholder account.
- Trustee
- In bankruptcy, a trustee is a person appointed by a bankruptcy court to supervise the affairs of person in bankruptcy, determine both assets and debts, gather and manage the assets if necessary, and report to the court. Most trustees in bankruptcy are full-time professionals and are paid from the estates of the debtors.
- Unsecured Credit
- Unsecured credit is typically a line of credit that is not secured by any equity; often only your promise to make payments as agreed.
- Variable Interest Rate
- An interest rate that may change from time to time. For example, a movement in the base rate would usually have an affect on an interest rate.
- Visa
- An international card scheme.
- Zip-Zap Machine
- A device, which is becoming increasingly rare to see, used to manually process card payments at point-of-sale using paper vouchers and by taking an imprint of a cardholder's card.
