Rare Credit Card Terms Used By Banks

Learn About Credit Card Terms that Banks Rarely Explain to Consumers

Nov 15, 2009

From time-barred debt, to charge-back periods, to sub-prime credit cards and more, learn about definitions for these terms, so that one is never surprised by the banks.

When it comes to dealing with credit cards, many people know some of the basic terminology such as APR or due date, but when it comes to more obscure terms, it can leave the credit cardholder scratching their head trying to figure out just what the heck the bank is talking about.

Here is a look at some of the more rare terms associated with using and maintaining a credit card account. By understanding the lingo, the credit cardholder can stay one step ahead of the banks.

Time-Barred Debt

Time-barred debt is debt that has fallen outside the statute of limitations for collection within a given state. Every state has a stature of limitations of between 3 and 10 years for collection of unsecured (credit card) debt. This means that if that debt falls outside of that timeline, a collection agency no longer has a legal right to that debt. It will simply be expunged from the credit history of the credit cardholder. This is especially helpful when a credit cardholder has been in dispute with a bank, because after that time frame has elapsed, the consumer can restore that piece of their credit.

Sub-prime Credit Card

A sub-prime credit card is a credit account that is extended from a credit card company to an individual with little credit history, or a history of bad credit. The term “sub-prime” refers to the higher interest rates and fees that are attached to such credit cards because of the risks associated with staking an individual with little or bad credit. As a credit cardholder, this should be a last resort when obtaining credit.

Charge Back Period

The charge back period is the amount of days that the credit card company may charge back or void a transaction made by one of their credit cardholders. This occurs when a consumer disputes a service for instance. The credit card company (on behalf of the card holder) disputes that service from the merchant. Once the charge back period has expired, the credit card company is then responsible for the charge.

Credit Utilization Ratio

When a person applies for credit from a bank or credit card company, the bank or credit card company will pull their credit report. One of the factors used in determining a credit score is the credit utilization ratio. This is a simple equation of the amount of debt that person has, divided by the amount total credit that has been extended to that person. For instance, if a person had $3,000 in debt, and a $10,000 credit line, then the ratio would be 30%.

More Credit Card Terms

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