Annual fee -- A bank charge for use of a credit card assessed each year, which can range from $15 to $300, billed directly to the customer's monthly statement. Many credit cards come without an annual fee.

Authorized user -- Any person to whom you give permission to use a credit card account.

Average daily balance -- This is the method by which most credit cards calculate your payment due. An average daily balance is determined by adding each day's balance and then dividing that total by the number of days in a billing cycle.

Annual percentage rate (APR) -- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans.

Additional principal payment -- Extra money included with a loan payment to pay off the amount owed faster. Over time, this practice reduces the amount of interest paid.

Adjusted balance -- A method used by some card issuers in which they subtract all payments made during the month, then add the finance charges.

Billing cycle -- The number of days between the last statement date and the current statement date.

Billing statement -- The monthly bill sent by a credit card issuer to the customer. It gives a summary of activity on an account, including balance, purchases, payments, credits and finance charges. Important changes to a credit card account are often included in small-print fliers that are sent with the statement.

Charge-off -- This is primarily an accounting term when a creditor eliminates a balance due on an account from the creditors assets. This is referred to as a “non-performing asset also knows as a “write-off” This debt is considered an uncollectable debt and will reflect on a credit report as a “bad debt” or “charge –off”. When an account is charged off, the creditor will generally demand the balce in full or agree to a settlement paid within 30 days.Charge-offes are generally reported to the credit bureaus as an I9 or R9. The number 9 is the code for a charged off account.

Co-signer -- A person who signs a promissory note that is also signed by one or more other parties. All parties take responsibility for the debt if any of the others renege.

Consumer Credit Counseling Service -- A service that offers counseling about how to work out a realistic budget and debt repayment plan and work with creditors. The goal is to ensure that debts are paid back over time.

Consumer credit -- Loans for personal or household use as opposed to business or commercial lending. Loans are generally unsecured, not backed by collateral.

Consumer debts -- Debts incurred for personal, as opposed to business, needs.

Credit -- Money that a lender gives to a borrower on condition of repayment over a certain period.

Credit bureau -- A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union.

Credit history -- A record of a person's debt payments.

Credit insurance -- A policy that pays off the card debt should the borrower lose his job, die or become disabled. The structure of protection for a revolving credit card debt is calculated each month to cover only the debt that existed at the last billing cycle.

Credit limit -- The maximum amount of charges a cardholder may apply to the account. The Consumer Federation of America suggests people carry credit lines no greater than 20 percent of their gross household income. For example, people with a gross income of $50,000 would cap credit lines at $10,000.

Credit line -- The maximum amount of money available in an open-end credit arrangement such as a credit card, or overdraft protection

Credit rating -- A judgment of someone's ability to repay debts, based on current and projected income and history of payment of past debts. Sometimes expressed as a number called a credit score.
Credit report -- A report that contains information about your borrowing habits and money-managing skills. Lenders use it to determine whether to approve a loan and to set the terms. A person with a good credit report is likely to get a better interest rate than someone with a poor credit report.

Credit score - A number, roughly between 300 and 800, that reflects the credit history detailed by a person's credit report. Lenders calculate this number with the assistance of computer systems as part of the process of assigning rates and terms to the loans they make.

Credit scoring system - A numerical system designed to measure the likelihood that a borrower will repay a debt created by assigning scores to various characteristics connected to creditworthiness.

Creditor -- One who is owed money.

Debt -- Money one person or firm owes to another person or firm.

Debt consolidation loan -- The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan.

Debt-to-income ratio -- The percentage of before-tax earnings that are spent to pay off loans for obligations such as auto loans, student loans and credit card balances. Lenders look at two ratios. The front-end ratio is the percentage of monthly before-tax earnings that are spent on house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower's other debts are factored in.

Debtor -- Technically, a person who has filed a petition for relief under the bankruptcy laws. More generally, anyone who owes.

Default -- The condition that occurs when a consumer fails to fulfill the obligations set out in a loan or lease.

Fair-Share -- A voluntary contribution from creditor.

Fair Credit Billing Act -- Passed by Congress in 1975 to help customers resolve billing disputes with card issuers. The act requires issuers to credit payments to a customer's account the day they are received. To be protected under the law, the consumer must write to the issuer within 60 days of the mailing date on the bill with the error. The issuer is then required to investigate and either correct the mistake or explain why the bill is correct within two billing cycles. The issuer also must acknowledge a customer's complaint in writing within 30 days. Each issuer is allowed to set specific payment
guidelines. If any of the guidelines are not met, the issuer can take as many as five days to credit the payment.

Fair Credit Reporting Act -- A federal law that governs what credit bureaus can report and for how long. It outlines procedures for correcting errors in credit reports. It requires credit bureaus to furnish copies of consumers' credit reports at their request.

Fair Debt Collection Practices Act -- A federal law that prohibits certain methods of debt collection, such as harassment.

Equal Credit Opportunity Act -- A federal law that prohibits discrimination in credit transactions on the basis of race, color, religion, national origin, sex, marital status, age, source of income or the exercise of any right under the Consumer Credit Protection Act.

Finance charge -- The charge for using a credit card, comprised of interest costs and other fees. The finance charge can be calculated with the following formula: Average Daily Balance x Daily Periodic Rate x Number of Days in Billing Cycle

Grace period -- If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.

Gross income -- This is all the money, goods and property you receive during the year before you reduce it by using adjustments, deductions or exemptions. People who use the barter system have to include the value of whatever they've received in exchanged for services as part of their gross income.

Introductory (or intro) rate -- The low rate charged by a lender for an initial period to entice borrowers to accept the credit terms. After the introductory period is over, the rate charged increases to the indexed rate or the stated interest rate. Often called a teaser rate.

Late fee- A fee that is charged by creditor to the clients account when a payment does not post by the specified due date

Minimum payment -- The minimum amount a cardholder can pay to keep the account from going into default. Some card issuers will set a high minimum if they are uncertain of the cardholder's ability to pay. Most card issuers require a minimum payment of 2 percent of the outstanding balance.

Monthly periodic rate -- The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12. See periodic rate.

National Foundation for Consumer Credit -- A nonprofit organization that educates consumers about using credit wisely. The NFCC is the parent group for Consumer Credit Counseling Service.

Over-limit fee- A fee that is charged by creditor to the clients account for a balance that is exceeding the client credit limit.

Past due fee -- A fee that is charged by the creditor to the clients account when an account is past due.

Power of attorney -- A document in which the signer authorizes someone to conduct business in his or her name -- signing title documents and checks, for example.

.Principal -- 1 The amount of money borrowed. 2. The amount of money owed, excluding interest.

Proposal -- A document sent to creditors proposing the repayment plan of their debt through out company. On a proposal we request the following:
• To accept the proposed payment
• Adjust the due date to coincide with ours
• Eliminate late and over-limit fees
• Reduce or eliminate the Interest
• Contribute Fair-Share

Re-age -- When an account status is updated to reflect current when the account is deliquent.

Rate -- Percentage a borrower pays for the use of money, usually expressed as an annual percentage.

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.

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.

Secured loan -- Borrowed money that is backed by collateral.

Unsecured debt -- Debt that is not guaranteed by the pledge of any collateral. Most credit cards are unsecured debt, which is a main reason why their interest rate is higher than other forms of lending, such as mortgages, which employ property as collateral.

Unsecured loan -- An advance of money that is not secured by collateral.

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The Credit Counseling Foundation
3350 NW 53 Street, Ft Lauderdale,
Florida 33309
Phone: 1-800-790-3882
Fax: 954-590-1221
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