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Tuesday, April 1, 2014

Annual percentage rate (APR) – The percentage cost of credit on an annual basis and the total cost of credit to the consumer.

Board of Governors – A federal government agency that is the centralized component of the Federal Reserve System. The governors guide the policy actions of the Federal Reserve System.

Card-not-present transaction – A card transaction in which the cardholder provides information from the card, including the card number, expiration date, name of cardholder, and security code to a merchant, but the card itself is not physically present to be seen or read by the merchant’s equipment.

Cash advance – Obtaining cash from a credit card instead of using the card to make a purchase. The advance is an instant loan, and finance charges are levied on the loan from the time it is obtained until it is paid in full.

Consumer credit – Use of credit for personal purchases as opposed to business purchases.

Consumer Financial Protection Bureau – An independent agency within the Federal Reserve System with the purpose of promoting fairness and transparency for financial products and services.

Credit card – A card that represents an agreement between a lender - the institution issuing the card - and the cardholder. Credit cards may be used repeatedly to buy products or services or to borrow money on credit. Credit cards are issued by banks, savings and loan associations, retail stores, and other businesses.

CARD Act of 2009 – The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) is a federal law passed by the U.S. Congress that provided new credit card rules and amended previous acts with regulations prohibiting unfair credit card practices. This law, among other things, requires changes on credit card disclosures, places restrictions on credit card companies by limiting fees and rate increases, and requires consistency in payment dates and times.

Debit card – A plastic card similar to a credit card that allows money to be withdrawn or payments to be made directly from the cardholder’s bank account.

Default – Failure to promptly pay interest or principal when due.

Disclosure – The act of revealing information; disclosure by creditors requires APRs and fees charged to be displayed prominently on forms and statements.

Federal Reserve System (The Fed) – The central bank of the United States.

Fees – Money charged to service an account or as a penalty.

Fraud – Intentional and deliberate misrepresentation of facts for profit or gain in violation of laws and regulations.

Interest – The price of using someone else’s money; the price of borrowing money.

Interest rate – The percentage of the amount of a loan that is charged for a loan. Also, the percentage paid on a savings account.

Introductory rate – A generally low interest rate offered for a limited time as an incentive to use a credit card.

Minimum payment– The minimum amount a cardholder must pay each month to remain a borrower in good standing.

Recession – A period of declining real income and rising unemployment; significant decline in general economic activity extending over a period of time.

Truth in Lending Act (1969) – A federal law that requires the disclosure of information about the cost of credit. Both the finance charges and APR must be displayed prominently on forms and statements.

Unauthorized transaction (third-party fraud) – A transaction made or attempted by an individual who is not authorized by the account holder or cardholder to use the given payment instrument (e.g., check, credit card, or debit/ATM card) to purchase goods and services, initiate funds transfers, or withdraw cash from an ATM.

Universal default – The practice of applying an increased APR on all of a consumer’s credit card accounts - both existing balances and new transactions - when the APR was changed on one account because the consumer engaged in some particular behaviors raising his or her credit risk.