Master 7 Difficult Credit Card Terms: An Easy Guide

Credit cards allow you to borrow money to pay for your purchases without having to run to your bank for a loan when you’re out of money. They usually carry annual fees, interest, and penalties that are imposed by the financial institution.

Though we are all quite familiar with credit cards, not all of us totally understand credit card terms.

ADVERTISEMENT

With that, below are seven credit card terms that are used by financial institutions today that you should know. 

credit card terms

Common Credit Card Terms and Acronyms

1. LOC

LOC stands for “line of credit”. This is where the credit card issuer offers you an option to borrow in the form of a cash advance. The amount of cash you’re allowed to borrow varies with your credit score.

ADVERTISEMENT

2. APR

APR means “annual percentage rate“. This is the amount of interest that your card accumulates over a year. With credit cards, the rates are usually higher than your other lending avenues.

 3. Secured Card

Secured credit cards aren’t more secure to carry than others. “Secure” means you have to secure the card with a deposit.

People who usually go for these cards are the ones with bad credit rates. These people must provide collateral (or something “secure”) such as an upfront cash payment, until they prove responsible usage of the card. They are also known as prepaid credit cards.

ADVERTISEMENT

 4. Unsecured Card

The opposite of secured cards or prepaid cards is an unsecured card. These are the most common types of credit cards on the market today. You do not have to put down any amount in order to use it.

If you have a healthy credit rating, you’re eligible for these cards. They also offer you higher lines of credit than secured cards. These cards will often include better cardholder benefits. 

 5. Open Loop Card

Some cards can be accepted across multiple locations and a variety of stores also accept them. They are referred to as open-loop cards. They’re most beneficial to people who are on the move as they can use them almost everywhere they go. In particular, many travelers choose an open-loop card. 

 6. Visa Card

If your card has been branded ‘Visa’ that means it is a Visa card. This means that it runs on the Visa processing network. It is the most used processing network to date with existence in over 200 countries. Visa cards are also a safe and reliable option for those who travel frequently. 

7. Private Label Card

A private label card is a card that’s used in a specific store only. You can’t use it in other stores. However, they can carry some great benefits when using it at those specific stores. These types of cards are common to find in large-scale department stores or chain stores that are more expensive. 

Final Note

Trying to choose the right credit card is a daunting task. There are many to choose from and sometimes it is hard to weigh one’s benefits against another’s. However, mastering the acronyms and terms that are used with credit cards is something that can help! Knowing what these credit card terms and acronyms mean can help you make a more informed decision about which card is right for you.