MoneyU Glossary of Terms

MoneyU Glossary of Terms

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Smart Card

A card containing a Central Processing Unit (CPU) that stores and secures information and makes decisions, as required by the card issuer's specific application needs.

Truth in Lending Act

The Truth in Lending Act seeks to tell U.S. consumers important information about credit terms that can help them make informed credit choices and should protect them against inaccurate and unfair billing practices. The Truth in Lending Act was amended by, and includes, the Fair Credit Billing Act (see Dispute).

Unsecured Loan

A loan based on a consumer's promise to pay, without savings or other collateral as a guarantee. Sometimes called a signature loan.

Variable Interest Rate

A variable interest rate is based on fluctuating rates in the banking system, such as the prime rate. For example, if on January 1, the prime rate was 6 percent and your credit card's variable rate formula was the prime rate plus 9.9 percent, your interest rate would be 15.9 percent (see prime rate).

Zero Balance

If you have no previous outstanding balances on your card account, and no new activity that month, this means that you have a zero balance. You might not get a bill since you do not owe anything.



To reduce a debt by making payments against the principal balance in installments or regular transfers.

Bad Credit

Poor credit rating. Things that damage your credit rating include late or missed payments, exceeding the credit line on cards, defaulting on loans, or declaring bankruptcy.


The amount of money you owe the card issuer. This includes purchases, fees, interest, and transaction charges.


Legal process for selling most of the debtorÔÇÖs property to help satisfy debts that canÔÇÖt be repaid, in exchange for (a) relieving debtors of the responsibility of paying their financial obligations or (b) protecting them while a plan is created and they try to repay debts. Two types of bankruptcy apply to consumers -┬á Chapter 7 and Chapter 13. Once a bankruptcy has been filed, foreclosures, garnishments, repossessions, utility cut-offs and debt collection activities are automatically stayed.

Chapter 13 Bankruptcy

A type of consumer bankruptcy under which the debtor doesn't forfeit personal property but agrees to a three- to five-year wage-earner plan to repay all or part of their debt. A Chapter 13 bankruptcy remains on a credit report for seven years.

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