Credit card terms, in plain words
The words that come up on card pages and in the app, each explained in a sentence or two. Where a term has its own explainer, the definition links to it.
Plain-English explainer · updated 2026-09-16
Rates and rewards
- Earn rate
- How many points, miles or cents a card gives for each dollar, such as 3x or 2%.
- Point value
- What one point is worth when you use it. We use a conservative middle value for each program, published on the point value pages.
- Cash back
- Rewards paid as money, usually a statement credit or a deposit. One cent is one cent.
- Base rate
- What a card earns on everything that isn't a bonus category.
- Bonus category
- A kind of spending, such as dining or groceries, that earns more than the base rate.
- Rotating categories
- Bonus categories that change every quarter and usually have to be activated first.
- Spending cap
- The most spending a bonus rate applies to in a month, quarter or year. Past it, the base rate applies.
- Transferable points
- Bank points, such as Chase Ultimate Rewards or Amex Membership Rewards, that can be moved to airline and hotel programs.
- Transfer partner
- An airline or hotel program that a bank's points can be moved to, often at 1 to 1 but not always.
- Booking portal
- A bank's own travel website. Some cards earn more only when you book through it.
Welcome offers and applications
- Welcome offer
- Also called a sign-up bonus: a one-time reward for opening a card and spending a set amount within a set time.
- Spend requirement
- How much you have to spend, within the time allowed, to earn the welcome offer.
- 5/24
- An application rule Chase is widely reported to use: many people who opened five or more cards in the last 24 months are declined. More on 5/24.
- Hard inquiry
- The credit check a bank makes when you apply. It can lower a credit score slightly for a while.
- Product change
- Switching a card to another card from the same bank, often one with no annual fee, without a new application.
- Authorized user
- Someone added to your card account who gets their own card. The account, and the bill, stay yours.
Fees and credits
- Annual fee
- What a card charges each year to keep it open.
- Statement credit
- Money taken off your bill, often for a certain kind of purchase, and sometimes split by month or quarter so an unused month is lost.
- Foreign transaction fee
- An extra charge, often about 3%, on purchases made abroad or in another currency.
- Balance transfer
- Moving debt from one card to another, usually for a fee, often to get a lower or 0% rate for a while.
- Intro APR
- A lower interest rate, often 0%, for a set number of months on purchases, balance transfers or both.
Your bill and your credit
- APR
- The yearly interest rate charged on balances you don't pay off.
- Statement balance
- What you owed when the statement closed. Paying it in full by the due date usually means no interest on purchases.
- Minimum payment
- The least you can pay by the due date without a late fee. The rest of the balance keeps building interest.
- Grace period
- The time between the statement closing and the due date when new purchases don't build interest, as long as the previous balance was paid in full.
- Credit limit
- The most you can owe on a card at one time.
- Credit utilization
- How much of your available credit you're using. Lower is generally better for a credit score.
Put it to work
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More basics:
How rewards work · Points vs cash back · Transferable points · How churning works · What is 5/24? · Are annual fees worth it? · Authorized users · Welcome offers · all guides →