Various Terms And Jargons Used For Credit Cards

Credit Card – A credit card is a financial instrument, which can be used more than once to borrow money or buy products and services on credit. Banks, retail stores and other businesses generally issue these.

Credit limit – The maximum amount of charges a cardholder may apply to the account.

Annual fee – A bank charge for use of a credit card levied each year, which ranges depending upon the type of card one possesses. Banks usually take an initial fixed amount in the first year and then a lower amount as yearly renewal fees.

Revolving line of credit - An agreement to lend a specific amount to a borrower and to allow that amount to be borrowed again once it has been repaid. Most credit cards offer revolving credit.

Personal Identification Number (PIN) - As a security measure, some cards require a number to be punched into a keypad before a transaction can be completed. The number can usually be changed by the cardholder.

Teaser rate - Often called the introductory rate, it is the below-market interest rate offered to entice customers to switch credit cards.

Joint credit - Issued to a couple based on both of their assets, incomes and credit reports. It generally results in a higher credit limit, but makes both parties responsible for repaying the debt.

Types of Cards

Master Card – MasterCard is a product of MasterCard International and along with VISA are distributed by financial institutions around the world. Cardholders borrow money against a line of credit and pay it back with interest if the balance is carried over from month to month. Its products are issued by 23,000 financial institutions in 220 countries and territories. In 1998, it had almost 700 million cards in circulation, whose users spent $650 billion in more than 16.2 million locations.

VISA Card – VISA cards is a product of VISA USA and along with MasterCard is distributed by financial institutions around the world. A VISA cardholder borrows money against a credit line and repays the money with interest if the balance is carried over from month to month in a revolving line of credit. Nearly 600 million cards carry one of the VISA brands and more than 14 million locations accept VISA cards.

Affinity Cards - A card offered by two organizations, one a lending institution, the other a non-financial group. Schools, non-profit groups, pro wrestlers, popular singers and airlines are among those featured on affinity cards. Usually, use of the card entitles holders to special discounts or deals from the non-financial group.

Standard Card – It is the most basic card (sans all frills) offered by issuers.

Classic Card – Brand name for the standard card issued by VISA.

Gold Card/Executive Card – A credit card that offers a higher line of credit than a standard card. Income eligibility is also higher. In addition, issuers provide extra perks or incentives to cardholders.

Platinum Card – A credit card with a higher limit and additional perks than a gold card.

Titanium Card – A card with an even higher limit than a platinum card.

Secured Card – A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.

Smart Card – Smart cards, sometimes called chip cards, contain a computer chip embedded in the plastic. Where a typical credit card's magnetic stripe can hold only a few dozen characters, smart cards are now available with 16K of memory. When read by a special terminals, the cards can perform a number of functions or access data stored in the chip. These cards can be used as cash cards or as credit cards with a preset credit limit, or used as ID cards with stored-in passwords.

Charge Card – Falls between a debit and credit card. Works like the latter and you don't have to be an accountholder. Just pay up in full when the bill arrives with the mail. No outstanding are allowed, in other words, no revolving credit facility either. American Express and Diners are providers.

Rebate Card – This is a card that allows the customer to accumulate cash, merchandise or services based on card usage.

Co-branded Card – This is a marriage of convenience between two service providers who want a trade-off with the other's strengths. Specific facilities are made to members through these tie-ups. So, TimesBank and Citibank have a co-branded card that allows concessional rates for add-on cards or telephone banking. Stanchart and Hindustan Lever Limited have a co-branded card to sell Aviance beauty products. SBI-GE Capital has a co-branded card for retail loans.

Cash Card – Cash cards, similar to pre-paid phone cards, contain a set amount of value, which can be read by a special cash card reader. Participating retailers will use the reader to debit the card in increments until the value is gone. The cards are like cash -- they have no built-in security, so if lost or stolen, they can be used by anyone.

Travel Card – These work mostly as debit cards for the limited purpose of travel. Citibank Dollar Card, American Express, Bobcard Global and Hong Kong Bank Thomas Cook International Card are among the players in this section.

Debit Card – It is the accountholder's mobile ATM. Open an account with a bank that offers a debit card, and payments for purchases are deducted from your bank account. The retailer swipes the card over an electronic terminal at his outlet, you enter the personal identification number on a PIN pad and the money is immediately debited at the bank. Citibank and a few domestic banks like Times Bank offer this.