Thursday, December 20, 2007

Credit And Banking Glossary


Affinity Card A card that is offered jointly by two organizations. One is a credit card issuer and the other is a professional association, special interest group or other non-bank company. For example, Citibank and American Airlines sponsor the Citibank AAdvantage card.

Amortization The process of fully paying off indebtedness by installments of principal and earned interest over a definite time.

Appraisal Fee The charge for estimating the value of property offered as security.

Annual Fee A yearly fee charged to the card for keeping the account open. Some cards have this fee and some do not.

Annual Percentage Rate (APR) The cost of carrying a balance on a loan expressed as an annual percentage. To calculate the amount owed in interest each month divide the APR by 12. For example, if the APR is 18% the monthly rate is 1.5%.

Asset Anything owned by an individual that has a cash value. This includes property, goods, savings or investments.

Average Daily Balance The average daily balance is a method used to calculate finance charges. It is calculated by adding the outstanding balance on each day in the billing period, and dividing that total by the number of days in the billing period. The calculation includes new purchases and payments.


Bad Credit A term used to describe a poor credit rating. Common practices that can damage a credit rating include making late payments, skipping payments, exceeding card limits or declaring bankruptcy. "Bad Credit" can result in being denied credit.
Balance The total amount of money owed. It includes any unpaid balance from the previous month, new purchases, cash advances, and any charges such as an annual fee, late fee or interest. The balance should not be confused with the monthly payment (the minimum payment allowed each month), which is generally 2% - 5% for revolving credit cards.
Balance Transfer Moving a balance (debt) from one credit card to another. This is often done with special checks or forms, or may be offered as an option on some credit card applications. The usual reason is to shift an ongoing debt to an account with a lower interest rate.
Balloon Payment A large extra payment that may be charged at the end of a loan or lease.
Bankruptcy Bankruptcy is a legal declaration of the inability to repay debts. Bankruptcy should be viewed as a last resort. It will have a severe impact on a credit rating and will remain on a credit report for ten years. Furthermore, bankruptcy is not a solution in all cases. Federal student loans, Federal tax debt and child support are all exempt from bankruptcy protection. Bankruptcy agreements vary but there are two types of agreements that most people choose: Chapter 7 and Chapter 13.

Chapter 7
In a Chapter 7 agreement, the court resolves most debts by selling assets and property so that the filer is given a fresh financial start. The court takes all assets including cars, homes, furnishings, jewelry or anything else of value. The assets are sold to pay off the debt. There are some debts that a person may wish to repay on their own instead of having the court resolve it. This is called reaffirmation. Reaffirmation is a special payment plan with the court. For example, if a car loan is reaffirmed, the person keeps the car and makes payments under new terms. Chapter 7 bankruptcy will not eliminate debts due to taxes, child support, alimony, student loans, court fines or personal injury caused by driving drunk or under the influence of drugs. A Chapter 7 filing will remain on a credit report for 10 years.

Chapter 13
In a Chapter 13 agreement, the court creates a debt repayment plan that allows the filer to keep their property. In order to file Chapter 13, a person must have a source of income and promise to pay part of their income to creditors. The court allows the filer to keep any assets that have debts against them if they pay them off under terms determined by the court. A Chapter 13 filing will remain on a credit report for 10 years. With Chapter 13, there is a better chance of obtaining future loans and credit.

Billing Cycle The number of days between statement dates. This is generally about 25 days..
Buydown A lump sum payment made to the creditor by the borrower or by a third party to reduce the amount of some or all of the consumer's periodic payments to repay the indebtedness.


Closed-end Credit Generally, any loan or credit sale agreement in which the amounts advanced, plus any finance charges, are expected to be repaid in full over a definite time. Most real estate and automobile loans are closed- end agreements.
Collateral Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. (Also called security.)
Community Reinvestment Act (CRA) Encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations.
Cosigner Another person who signs for a loan and assumes equal liability for it.
Credit The promise to pay in the future in order to buy or borrow in the present. The right to defer payment of debt.
Creditworthiness A creditor's measure of a consumer's past and future ability and willingness to repay debts.
Credit Card Any card, plate, or coupon book that may be used repeatedly to borrow money or buy goods and services on credit.
Credit History A record of how a person has borrowed and repaid debts.
Credit Scoring System A statistical system used to determine whether or not to grant credit by assigning numerical scores to various characteristics related to creditworthiness.


Default Failure to meet the terms of a credit agreement.
Discount An amount deducted from the regular price for those who purchase with cash instead of credit.


Finance Charge The total dollar amount paid to get credit.
Fixed Rate A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.


Graduated Payment Repayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization.


Liability on an Account Legal responsibility to repay debt.


Negative Amortization Repayment schedule calling for periodic payments that are insufficient to fully amortize the loan. Earned but unpaid interest is added to the principal, increasing the debt. Eventually, payments must be rescheduled to fully pay off the debt.


Open-end Credit A line of credit that may be used repeatedly up to a certain limit, also called a charge account or revolving credit.
Open-end Lease A lease that may involve a balloon payment based on the value of the property when it is returned. (Also called finance lease.)
Overdraft Checking Account A checking account associated with a line of credit that allows a person to write checks for more than the actual balance in the account, with a finance charge on the overdraft.


Points Finance charges paid by the borrower at the beginning of a loan in addition to monthly interest; each point equals one percent of the loan amount.


Renegotiable Rate A type of variable rate involving a renewable short- term "balloon" note. The interest rate on the loan is generally fixed during the term of the note, but when the balloon comes due, the lender may refinance it at a higher rate. In order for the loan to be fully amortized, periodic refinancing may be necessary.


Security Interest The creditor's right to take property or a portion of property offered as security.
Seller's Points A lump sum paid by the seller to the buyer's creditor to reduce the cost of the loan to the buyer. This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount.
Service Charge A component of some finance charges, such as the fee for triggering an overdraft checking account into use.
Statement The monthly bill from a credit card issuer that describes and summarizes the activity on an account. A statement includes the outstanding balance, purchases, payments, credits, finance charges and other transactions for the month.
Statement Date The date on which a statement is generated, and the month's finance charges (interest) are added to the balance.
Subprime A category of financial products which are marketed to customers with damaged credit (or sometimes, no credit, or just low income.) Subprime customers are often defined as those with FICO scores between 500 and 620.
Surcharge An extra charge imposed on those who purchase with a credit card instead of cash. (Currently, surcharges for credit card purchases are prohibited.)


Variable Rate A variable rate agreement, as distinguished from a fixed rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.


Monday, December 10, 2007

Card Calculator

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If no result, Search for this site. Copy and paste on this "calc/payment.amp" in search box and browse the site.

Featured Cards: Cardtrak

Thursday, December 6, 2007

Battling rising credit card interest rates

How to keep ahead of rates and lower them when your card issuer hikes them up.

By Gerri Willis, CNN

NEW YORK ( -- A congressional panel turned the spotlight on what has been called "unfair" practices of credit card issuers yesterday. This is part of a broader regulatory effort to crack down on credit card practices that are deemed unfair to customers. Here's how you can fight back against rising interest rate fees.

Members of a U.S. Senate subcommittee found that some of the top credit card companies automatically increase cardholder interest rates even though people were current on their payments. The rate increase was attributed to a drop in their credit score.

In one case, a credit card interest rate increased from 8% to 23% because of a drop in a FICO credit score. Subcommittee Chairman Carl Levin, D-Mich., is aiming to pass a bill that would protect consumers from certain sudden interest rate hikes.

The Federal Reserve plans to require credit-card issuers to give customers at least 45 days' notice before raising interest rates and to provide clearer information on fees.

1. Scrutinize your statements

First, realize that your credit card issuer can change your rate at any time, for any reason. And you should receive written notification that your rate is changing.

Card issuers have to send a separate notice if it was a change in terms. But if the issuer already disclosed in the cardholder agreement that your rate could change under certain circumstances, you'll get the info in your statement. You'll need to know what rate you're paying.

And you should scrutinize every statement. The change in your interest rate may not necessarily come on a separate piece of paper. It may be buried somewhere on your bill.

2. Lower your Rate

The good news here is that you do have options. First, if you've found out your rate has been raised, but you've been making on-time payments consistently, call customer service and see if you can get your original rate. Some of the witnesses at the hearing were able to get their interest rate knocked down.

But otherwise, take heart. Two major credit card issuers - JP Morgan Chase and Citigroup have already announced they will do away with this practice or raising interest rates based on credit scores.

Chances are, you'll be able to negotiate if you pit issuer against issuer and threaten to transfer your balance to one of these other cards according to Curtis Arnold of And, chances are that these other cards will follow in Chase and Citi's lead.

3. Monitor your Credit

It seems that everyone else is checking your credit score. Now is the time to monitor your credit.

First, get your free credit score if you haven't done it this year. The website you want to go to is

Next, make sure you know what some of the biggest credit mistakes are. If you open up a retail store credit card for example your credit score could drop.

And charging up to your credit limit will also hurt your score. To find out what can help or hinder your score, go to

Another fee to keep your eye on is the balance transfer fee. These fees have gone up 300% to 400% this year alone. You'll want to look for offers that are capped at $50 to $75.

The man who could be Citi's king

A high-profile speech to insiders could be a clue to the Citigroup CEO succession puzzle. Meet Vikram Pandit.

By Patricia Sellers, editor at large

NEW YORK (Fortune) -- Did Citi's past meet Citi's future today?

When 80 or so alumni of Citicorp - the global bank that merged into behemoth Citigroup (Charts, Fortune 500) - met in midtown Manhattan for their annual alumni lunch this afternoon, an intriguing speaker subbed for Chuck Prince, the company's recently ousted CEO: Vikram Pandit, the man who could be king.

No one knows whether he will be since the CEO search is in process - and hitting walls, we hear. But the appearance by Pandit, who oversees Citi's institutional businesses, adds to speculation that he is in the lead to nab the top job.

To this formidable audience of former Citi honchos - including Rick Braddock, Larry Small, Victor Menezes and Nancy Newcomb - Pandit said the right things. He told the alums that Citigroup has a great franchise but needs to do a lot better in terms of productivity, risk management and culture. Right on.

Taking questions, he was not specific enough for a few folks, who grumbled that Prince, last year's speaker, was better with numbers and details. But then again, what did details-oriented Prince, a lawyer by training, get Citi? Declining profits and multi-billion writeoffs, that's what.

The alums agreed on one thing: Whoever takes charge at Citigroup - whether it turns out to be Pandit or a CEO recruit from the outside - that executive needs to return the leadership to real business people who know, first and foremost, how to run a bank and rebuild a global giant.

Source: news

Tuesday, November 27, 2007

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