1920 was the year that saw a major shift in how financial institutions conducted business. This went about and bore the idea of the modern-day credit cards as you know them. Though we are all quite familiar with credit cards, not all of us totally understand credit card terms.
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. With that, there are a long list of the credit card terms that are used by financial institutions.
Common Credit Card Terms and Acronyms
LOC in full means 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.
Another commonly used term is ‘APR,’ which in essence means annual percentage rates. 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
If you’re in the market for a credit card you’ve probably heard the word ‘secured credit cards.’ It doesn’t mean that they’re more secure to carry than others. The ‘secure’ here is in financial terms where you have to secure the card with a deposit.
People who usually go for these cards are the ones with bad credit rates until they prove responsible usage of the card. They are also known as prepaid credit cards.
4. Unsecured Card
The opposite of secured cards or prepaid cards are the unsecured cards. 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 rate, you’re eligible for these cards. They also offer you higher lines of credit than the secured cards. These cards will often include better card holder benefits.
5. Open Loop Card
Some cards can be accepted across multiple locations and a variety of stores also accept them. These are the ones that 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 would want to 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
If you’ve ever heard the term ‘individual label card’ and thought it’s a private club type, you aren’t far from it. A private label card is a card that’s used in a specific store. You literally can’t use it in other stores. However, the 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 are more expensive.
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.