Glossary

Annual fees—Many credit card issuers charge an annual fee for giving you credit, typically $15 to $55.

 

Annual Percentage Rate (APR)—The cost of credit expressed as a yearly rate.

 

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

 

Balloon Payment—A large extra payment that may be charged at the end of a loan or lease.

 

Bankruptcy—Bankruptcy is considered the credit solution of last resort. Unlike negative credit information that stays on a credit report for seven years, bankruptcies stay on a credit report for 10 years. Bankruptcy can make it difficult to rent an apartment, buy a house or condo, get some types of insurance, get additional credit, and sometimes, get a job. In some cases, bankruptcy may not be an easily available option.

 

Billing Error—Any mistake in your monthly statement as defined by the Fair Credit Billing Act.

 

Budgeting—In many cases people design and stick to a budget to get their debt under control. A budget is a plan for how much money you have and how much money you spend. Sticking to a realistic budget allows you to pay off your debts and save for the proverbial rainy day.

 

Business Days—Check with your institution to find out what days it counts as business days under the Truth in Lending and Electronic Fund Transfer Acts.

 

Closed-End Lease—A lease in which you are not responsible for the difference if the actual value of the item at the scheduled end of the lease is less than the residual value, but you may be responsible for excess wear-and-use charges and for other lease requirements.

 

Collateral—Property, such as stocks, bonds or a car, offered to support a loan and subject to seizure if you default.

 

Cosigner—Another person who signs your loan and assumes equal responsibility for it.

 

Credit—The right granted by a creditor to pay in the future to buy or borrow in the present; a sum of money due a person or business.

 

Credit Bureau—An agency that keeps your credit record; also called a credit-reporting agency.

 

Credit Card—Any card, plate, or coupon book used periodically or repeatedly to borrow money or buy goods or services on credit.

 

Credit History—The record of how you've borrowed and repaid debts.

 

Creditor—A person or business from whom you borrow or to whom you owe money.