How to use this glossary
Credit card documents use a small vocabulary over and over. Two documents carry almost all of it: the rate and fee table that comes with an application (often called the Schumer box, which Regulation Z section 1026.60 requires) and the monthly statement (section 1026.7). If you know the terms below, you can read both in a few minutes and spot the line that will cost you money.
Each entry has a plain definition and a worked number. The numbers are illustrative; your cardholder agreement, which the CFPB describes as the document stating the terms and conditions of your card, controls the real ones.
Rates
Card issuers often apply separate APRs to purchases, cash advances and balance transfers, and the CFPB says your statement must show each category with a different APR and the balance in each.
| Term | Plain definition | Worked number |
|---|---|---|
| APR (annual percentage rate) | The CFPB calls it the standard way to compare how much loans cost; on a card it is the yearly interest rate for a balance type. | A 24% APR on $1,000 carried all year costs roughly $240 before compounding. |
| Interest rate | The price you pay for borrowing money (CFPB). On most cards the purchase APR is the interest rate. | Same 24% as above. |
| Daily periodic rate | The APR divided by the days in the year your agreement uses; applied to the amount owed each day. | 24% / 365 = 0.0658% a day; $1,000 for 30 days = about $19.73. |
| Purchase APR | The rate on ordinary purchases. Most cards give a grace period on these. | 22% purchase APR on a $500 balance carried one 30-day cycle: about $9.04. |
| Cash advance APR | A separate rate on cash withdrawals and cash-like transactions; interest generally starts on the transaction date (CFPB). | 29.99% on $500 for 30 days: about $12.32 before fees. |
| Balance transfer APR | The rate on debt moved from another card; may be a promotional rate for a period. | 0% for 15 months, then the stated rate on what is left. |
| Penalty APR | A higher rate triggered by events such as a late payment. The rate table must state the rate and a brief description of the trigger. | Purchase APR 22%, penalty APR 29.99%: on $2,000 carried all year that is about $160 more interest. |
| Introductory or temporary rate | A lower rate for a set period. Regulation Z lets the issuer raise it at the end only if the period was at least six months and disclosed in advance. | 0% for 12 months, then 22% on the remaining balance. |
| Variable rate | A rate that moves with an index outside the issuer's control; the issuer can raise it only when the index rises. | Index 7.5% + margin 14% = 21.5%; if the index rises 0.25 point, the APR becomes 21.75%. |
Dates and balances
These terms decide whether you pay interest at all. The CFPB says that if you pay your full balance by the due date most cards charge no interest on purchases, and that interest is generally calculated daily on the average daily balance when you do carry one.
| Term | Plain definition | Worked number |
|---|---|---|
| Billing cycle | The period covered by one statement, usually about a month. | Sept 15 to Oct 14 is a 30-day cycle. |
| Statement closing date | The last day of the cycle. The statement must show this date and the balance outstanding on it (Regulation Z 1026.7). | Closing date Oct 14. |
| Statement balance (new balance) | What you owed on the closing date. Paying it in full by the due date keeps the purchase grace period on most cards. | Statement balance $1,200 on Oct 14. |
| Current balance | Everything posted to the account now, including activity after the statement closed. | $1,200 statement balance + $300 purchased on Oct 18 = $1,500 on Nov 1. |
| Payment due date | The deadline for at least the minimum. It must fall on the same day of the month each cycle, and the bill must arrive at least 21 days earlier. | Statement closes Oct 14; due Nov 10, which is 27 days later. |
| Payment cut-off time | The time on the due date after which a payment counts as next day. Regulation Z bars cut-offs earlier than 5 p.m. on the due date. | If the cut-off is 5 p.m., an online payment at 4:30 p.m. on the due date is on time. |
| Grace period | The CFPB defines it as the period between the end of a billing cycle and the payment due date; issuers are not required to offer one. | Pay $1,200 by Nov 10: $0 interest on those purchases. |
| Average daily balance | Sum of each day's balance divided by days in the cycle; the base most issuers use for interest. | 10 days at $1,000 + 20 days at $1,500 = $40,000 / 30 = $1,333.33. |
| Credit balance | An amount the issuer owes you, for example after a refund (CFPB). | You paid $200, then returned a $250 item: credit balance $50. |
Fees
The rate table must list fees for issuance or availability, transaction charges, cash advance, late payment, over-the-limit, balance transfer and returned-payment fees (Regulation Z 1026.60). Section 1026.52 caps several of them.
| Term | Plain definition | Worked number |
|---|---|---|
| Annual fee | A fee for having the card, listed as a fee for issuance or availability. | $95 a year; on a card you use for $3,000 of spending, rewards must beat 3.2% just to break even. |
| First-year fee cap | Total fees in the first year cannot exceed 25% of the credit limit at opening (1026.52). | $400 limit: first-year fees capped at $100. |
| Late fee | A penalty for missing the due date. It cannot exceed the minimum payment that was due (1026.52). | Minimum due $25: a late fee above $25 is not allowed. |
| Cash advance fee | Charged on cash withdrawals and cash-like transactions; Capital One says it typically ranges from 3% to 5% or a flat amount, whichever is greater. | 5% on $500 = $25. |
| Balance transfer fee | A fee for moving a balance from another card (the CFPB says fees usually apply). | 3% on $2,000 = $60, added to the new balance. |
| Foreign transaction fee | A transaction charge on purchases processed abroad, disclosed in the rate table. | 3% on a $600 hotel bill = $18. |
| Returned-payment fee | Charged when your payment bounces. Regulation Z allows only one penalty fee per event. | A bounced payment that is also late cannot trigger two penalty fees for that one event. |
| Over-the-limit fee | A fee for going above the limit; capped at the amount you went over during the cycle. | $1,000 limit, balance $1,012: fee cannot exceed $12. |
| Minimum interest charge | The smallest interest charge billed when any interest is due; must be disclosed when it exceeds a $1.00 threshold adjusted for inflation. | Interest calculates to $0.40; a minimum charge of $1 would bill $1. |
Payments and statement warnings
| Term | Plain definition | Worked number |
|---|---|---|
| Minimum payment | The smallest amount that keeps the account current. Paying only this means interest on the rest. | Minimum $35 on a $1,200 statement: $1,165 starts accruing interest. |
| Minimum payment warning | A statement box showing how long payoff takes with minimum payments only, the total cost, and the monthly payment to pay off in 36 months (1026.7). | $3,000 at 22.15%: the 36-month payment is about $115. |
| Payment allocation | Amounts above the minimum must go first to the balance with the highest APR (1026.53). | Pay $300 when the minimum is $50: $250 goes to the cash advance balance at 29.99% before purchases at 22%. |
| Two-cycle billing | Charging interest on balances from billing cycles before the most recent one; Regulation Z 1026.54 prohibits it. | A balance paid off in September cannot generate interest in November's calculation. |
| Autopay | An automatic payment from a bank account; the CFPB lists automatic payments and electronic reminders as ways to pay on time. | Autopay set to statement balance pays $1,200 on Nov 10. |
Limits, credit reports and account events
| Term | Plain definition | Worked number |
|---|---|---|
| Credit limit | The most you can borrow. The CFPB says issuers set it from your credit report and history and the income you provide. | $1,500 limit. |
| Available credit | Limit minus balance and pending charges. | $1,500 limit - $400 balance - $60 pending = $1,040. |
| Credit utilization | Credit used divided by credit available. The CFPB says many experts recommend using less than 30% of your total limit. | $450 of $1,500 = 30%; under 10% would be under $150. |
| Adverse action notice | If the issuer lowers your limit, it generally must give you specific reasons or tell you how to request them (CFPB). | Limit cut from $3,000 to $1,500: you get a notice. |
| Cardholder agreement | The document with the terms and conditions of your card (CFPB). | Check it for the balance method and divisor. |
| Prescreened offer | An offer based on credit-bureau information that meets the issuer's criteria (CFPB). | A mailed offer generated from your credit file. |
| Unauthorized use | Use of a card by someone without the right to use it (CFPB). | A thief's $300 charge after your card is stolen. |
| Ability to pay | Issuers must consider whether you can make the minimum payments from income or assets; applicants under 21 need independent ability or a cosigner aged 21+ (1026.51). | A 19-year-old with no income needs a 21+ cosigner. |
Questions before you decide
What is the difference between a grace period and a due date?
The CFPB defines the grace period as the period between the end of a billing cycle and the date your payment is due. The due date is the end of that window. Issuers must deliver the bill at least 21 days before payment is due, and under Regulation Z the due date must be the same day of the month each cycle.
When can a card company apply a penalty APR to my existing balance?
Regulation Z section 1026.55 generally bars raising the rate on existing balances, with exceptions. One is when the issuer does not receive a required minimum payment within 60 days after its due date. If you then make six consecutive minimum payments on time, the issuer must reduce the rate back for those earlier balances.
Where do I find all these numbers for my own card?
Two places. The rate table in the application and agreement, which Regulation Z section 1026.60 requires to show APRs, annual fees, the grace period, the balance computation method and fees such as cash advance, late and balance transfer fees. And your monthly statement, which section 1026.7 requires to show the closing date, new balance, due date, late payment costs and interest and fee totals.
Follow the sources
- CFPB: Credit card key terms Checked Oct 30, 2026
- CFPB: What is a grace period for a credit card? Checked Oct 30, 2026
- CFPB: How does my credit card company calculate the amount of interest I owe? Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.60 credit and charge card applications and solicitations Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.7 periodic statement Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.10 payments Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.52 limitations on fees Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.53 allocation of payments Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.54 limitations on the imposition of finance charges Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.55 limitations on increasing APRs and fees Checked Oct 30, 2026
- CFPB: Regulation Z, 12 CFR 1026.51 ability to pay Checked Oct 30, 2026
- CFPB: How do I get and keep a good credit score? Checked Oct 30, 2026
- CFPB: Why did I get a low credit limit on a credit card? Checked Oct 30, 2026
- Capital One: What is a cash advance? Checked Oct 30, 2026
Provider terms can change. Recheck the linked source before applying or subscribing.