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Credit Glossary

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Glossary >

The selection of terms on this page to define and their definitions represents the opinions of this site only.
No approval is to be implied by any advertiser, potential advertiser, or any other third-party.
I do not speak on behalf of any one firm or any industry group.
I do not have any non-public sources of information, but that means I am free to write what I want.
Readers are free to view the statements above as either a list of bugs or a list of features.
For readers outside the Unites States, as to how any of the information on this website impacts you in your country... I have absolutely no idea.
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Glossary Format: Term ( common abbreviation if applicable )



Form reporting income other than W2 employment income.


Request for a transcript of IRS tax return.
The data returned will NOT be a pdf or image of the actual 1040 form that the taxpayer submitted.
4506-C has replaced Internal Revenue Service form 4506-T.


JP Morgan Chase rule for applying for Chase credit cards.
If you have opened 5 or more revolving credit accounts in the last 24 months, there is a strong chance that you will be DENIED for a growing list of Chase cards REGARDLESS OF YOUR CREDIT SCORE.
The number of Chase cards to which 5/24 applies is expanding so I will avoid trying to make a list here that at very best would only be valid at a specific moment in time.


Admirals Club

Branding for American Airlines airport lounges.

Affinity Card

Credit card issued in partnership with a non-profit institution, such as a charity or university.

Airport Lounge

Space in an airport for passengers to wait for flights other than in the public seating in terminals.
Plot twist: The success of travel-oriented credit cards that include access to airport lounges has led to overcrowding in airport lounges.
See: Travel > Priority Pass.

All Zero Except One ( AZEO )

A widely cited strategy is that one input into your FICO credit scores will be maximized if all of your credit cards report with zero balances except for exactly one account that reports with a utilization greater than 0% but less than 8.9%.
Having a credit card report a balance to credit reporting agencies does NOT mean you should be paying interest.
Many credit card issuers report balances to credit reporting agencies as of statement closing date, though US Bank is an exception.
US Bank reports as of the end of the month.
The impact of All Zero Except One on your FICO score is using the data that has been reporting to the credit reporting agency as of the time that a score is calculated.
Your AZEO status as of some point in the past does not directly impact your score today.
Think of it as a professional boxer trying to restrict fluid intake to get weight under a specific threshold for a weigh in for before a fight.
In contrast, with a credit score you are trying to use whatever techniques are available to get above a given threshold.
Unless you are trying to burnish your score for a credit application this strategy may not be worth worrying about, and even then there is no guarantee that it will give you the points that you need.
Far more of an advanced concept than I would prefer to have at the beginning of the glossary... but since this is a glossary I do not have much license to change the order.

Also Known As ( aka )

I will use AKA to indicate when a definition may go by more than one name.

American Express ( Amex )

US headquartered global issuer of charge and credit cards.
Account numbers start with 3.
The American Express mass-market premium card is the Platinum charge card.
Even for many younger people, American Express may be almost a synonym for charge card.
However, American Express also offers a large assortment of revolving credit products.
For additional detail, navigate to Credit > American Express.

Annual Fee

A credit product may or may not have a fee per cardmember year.
If there is an annual fee, it may or may not be waived the first year.
When applying for a credit product where the annual fee is waived the first year, consider the impact of the fee in future years.
For example, I only practice the All Zero Except One strategy listed earlier in the glossary when I am preparing for an important credit application such as a mortgage.
Should you be doing so and you have any credit cards that have annual fees, consider how the impact of annual fees posting will impact the strategy.
For an American Express card that has an annual fee, the annual fee may be posted to the account and be part of the balance reported to credit bureaus.
In that case, even though you may not have made recent charges to the account, a balance may still be reported.

Authorized User ( AU )

Person that a primary account holder has granted the ability to use account.
Depending on the card, an authorized user may have access to all or a portion of the credit line.
Be sure to read a given product's card member agreement to understand what features of the card are available to authorized users.

Average Age of Accounts ( AAoA )

A little knowledge can be dangerous.
If you read enough credit forums, you will eventually come across posts about how after opening an account a consumer has learned that average age of accounts is an input into his or her credit score.
The consumer incorrectly believes that closing the new account will remove the new account from the AAoA metric, so he or she proceeds to close the account.
What the consumer missed is that for many scoring algorithms currently in use, AAoA includes accounts on his or her credit report regardless of whether the accounts are currently open or not.
However, by closing the account soon after opening it, the consumer has caused the product's issuer to regard him or her less favorably going forward.
Additionally, other creditors will also see the account being opened then closed on the customer's credit reports.
Even with the account now closed, if the account was reported on the customer's consumer credit report, it will still be counted against accounts counted for the Chase 5/24 rule.

Bait And Switch

Regardless of whether you consider yourself to be a digital-native or digital-immigrant, you are likely familiar with the term "Catfish".
Catfishing is just a special case of the term "bait and switch".
Navigate to More > Bait And Switch to see this site's take on Bait And Switch.

Balance Chasing

Instead of outright closing an account, an issuer of a revolving credit account might continue to reduce a credit line to just barely over the debt outstanding as principal is paid off.
A credit issuer might start balance chasing due to the deterioration of an individual's credit and/or the overall economy.

Balance Transfer, Balance Transfer Fee

A bank or credit union may give you the option of using one of the credit products it issues to pay a credit card from another institution.
In addition to whatever interest rate is charged, generally expect a balance transfer fee from zero to five percent as part of these offers.
While both the interest rate and balance transfer fee may be expressed as percentages, the interest rate will be a yearly percentage rate and the balance transfer fee will most very likely be a fee charged all at once at the time of the balance transfer.

Bank Of America

Among the very largest US financial institutions.
Many people outside the financial industry might be surprised to learn that the genealogy of this bank would be that Nations Bank of Charlotte, North Carolina purchased San Francisco based Bank of America and took on the name.


UK based financial institution.
Among the more conservative issuers of credit in the United States.
In 2016 Barclays became the issuer of JetBlue co-branded credit cards and took over the portfolio of JetBlue cards that had previously been issued by American Express.
While however many consumers still hold Barclays non-cobranded cards issued in the past, viewing the U.S. Barclays site in the summer of 2020, all available Barclays cards are co-branded.
If you scroll forward to "Co-branded" I will explain why a consumer should be careful not to rely exclusively on cobranded cards.

Benefits Card aka Perks Card

In the context of government services this could mean a TANF (Temporary Assistance to Needy Families) card.
However with respect to this blog, a benefits or perks card is a credit or charge card whose value primarily comes in the form of hotel status and/or airport lounge access as opposed to cash back, miles, or points.
Such cards have very high annual fees that could not be justified on the basis of just cash or points back without considering the access to benefits aka perks.
A non-exhaustive list of benefits cards in this context would be the American Express Platinum charge card, the Citibank issued AAdvantage Executive credit card, and the JP Morgan Chase issued United Club credit card.
Please consider audience and context when using this language.
If on a blind date you say to your prospective romantic partner that you plan to pay for this evening's night out with your benefits card, she might excuse herself to go to the restroom, never to return.
Well, unless your date sees the evening as a foodie call, in which case she may not care how you are paying, just that you are paying.
Given the above, it would probably be best to just use the phrase "perks card" and not "benefits card" but then you would have missed my attempt at humor.


A card or account that continues to be restricted by the consumer's credit profile as of the time that the account were approved.
For example a consumer's FICO 8 score may have increased from 650 to 750 over time but the financial institution will not allow upgrades or credit lines comparable to a consumer that had newly applied with a FICO 8 score of 750.

Calendar Year

Start of January 1 through the end of December 31 of a given year.

Capital One

US issuer of credit cards targeted to customers with fair profiles or those who are new to credit.
Known for Triple Pull.

Card Identification Number ( CID ) aka Card Verification Value ( CVV )

Additional digits in addition to account number intended to lessen the chance of fraud.
Three digits on back of Discover, Mastercard, and Visa cards.
Four digits on the front of an American Express card.
To the best of my knowledge, the card identification number will still appear on the front of a card running on the American Express payment network even when that card is issued by a third-party such as Wells Fargo.

Cardmember Year

The date of month of account issuance through previous date of the following year.
The last few days of last year, credit and travel related message boards were inundated with questions regarding whether a given card benefit is by calendar year or cardmember year.
Maybe this year will be different... but given the amount of travel postponed and outright canceled in 2020, maybe not.


Service that provides some history of a vehicle.
Not exhaustive but better than nothing?
Well, not so fast.
Carfax reports contain significant disclaimers.
A Carfax report is in no way a substitute for a pre-purchase inspection of a vehicle by a qualified mechanic.

Centurion Lounge

Network of airport lounges run by American Express.
Access is granted by having either an American Express Platinum charge card or an American Express Centurion charge card.
Beginning January 30, 2020 the American Express Delta Reserve co-branded credit cards also began providing access to Centurion Lounges.
However, unlike the Platinum and Centurion charge cards, to access Centurion Lounges Delta Reserve cardholders will need to be flying Delta airlines.
At one point holders of the American Express Gold charge card were allowed to purchase entry into Centurion Lounges but that is no longer the case.
If having an American Express Platinum charge card guaranteed you a seat in a Centurion Lounge, that benefit alone might be worth the card's annual fee if you spend enough time in airports that have Centurion Lounges.
Spoiler Alert: Having a Platinum card actually doesn't guarantee you a seat.
Depending on lounge capacity and demand at a given time, even with a Platinum card you still may either be granted access but with no place to sit or you may be outright denied entry.

Checking Line Of Credit ( CLOC )

May also be known as a Reserve Line of Credit or Personal Line of Credit.
Line of credit against which checks can be written.
A line of credit may be a standalone product or attached to the checking account you primarily use.
Unlike a credit card, barring some unlikely promotional offer, a checking line of credit will NOT have a grace period before which interest starts to accrue.


Opening accounts for the purpose of capturing signup bonuses.
Rules such as Chase 5/24 are making this more difficult.


Among the very largest US financial institutions.
Mass-market premium credit card is the Premier.


Credit product issued by a financial institution in association with another company.
Often a travel related company such as an airline or hotel chain but could also be a retailer.
The relationship between the financial institution and the other company may or may not be exclusive.


Owned by Alliance Data.
Issuer of store cards.
One of its better-known products is the Victoria's Secret Angel Card

Confidence Man ( Conman )

Sometimes terms become better known by their abbreviation than their original name.
Confidence man is one such case.
If I were to ask you for the password to one of your acccounts, your politest possible response might be to ignore me.
Instead, a conman might send out emails saying that your account has been hacked and that you should click on a link, enter your login and password then reset your password.

Confirmation Bias

Interpreting available datapoints to support a given belief or goal regardless of the natural truth.
For example, if your friend or relative is a hiring manager he might argue that your well-crafted blog supports the fact that you are the best candidate.
Alternatively, if the hiring manager is the friend or relative of a competing candidate, he or she might argue that your blog would distract you from the job if you were hired.


From the perspective of this website, the terms "conservative" and "lenient" will usually refer to credit underwriting.
A conservative lender will be less likely to extend credit and a lenient credit will be more likely to extend credit.
If I say a given lender has lenient underwriting, that does not mean every application will be approved and if I say another lender is conservative that does not mean that every loan will be paid on time with zero delinquencies.
As consumers seeking credit we might prefer that all issuers of credit be lenient, while as taxpayers collectively on the hook for bailouts during downturns we may prefer that all creditors be conservative.

Continuously Variable Transmission ( CVT )

A conventional automatic transmission might have for example 3, 4, 5, or 8 possible gears whereas a continuously variable transmission has a lower and upper range of gears with no such specific limits of gearing in the range between them. As an analogy, think of a conventional automatic transmission as a radio that you may be able to tune in using only the buttons that define its preset stations and a CVT being a radio dial that you may tune in anywhere between the top and bottom of its range. Sadly for a few automobile manufacturers, the promise of a reliable CVT is much like the promise of free beer tomorrow at a pub: always right around the corner but never actually delivered.
Rather than contribute to my already formidable list of enemies, if you are considering purchasing an automobile that has a CVT please google the manufacturer, model, and year together with the text "CVT".


The opposite of what a reasonable person might think.
Maybe it is just me, but I find it to be counterintuitive that octopuses hunt crabs and not the other way around.

Credit Acquistion Risk Score ( CARS )

JP Morgan Chase internal credit score.
For third-party credit scoring algorithms such as FICO scores and Vantage scores, the general public knows relatively little.
For issuer specific credit scores, the general public knows even less.

Credit Based Insurance Score ( CBIS )

If you have a low credit score, in all but the few states that do not allow credit to be part of setting rates, it may not only cost you more to finance a car it may also cost you more to insure it.

Credit Bureau aka Credit Reporting Agency ( CRA )

Organization that collects and sells credit information.

Credit Card Accountability Responsibility and Disclosure Act ( Card Act )

Legislation passed by the United States Congress in 2009.
The act implemented several consumer protections.
Among those protections was stopping card issuers from raising annual fees in a cardmember's first year having a product.
A side effect of that means that during the first year of having a card, issuers are prevented from product changing the card account to a product that has a higher annual fee, even if the consumer requests that the issuer do so.

Credit First National Association ( CFNA )

Issuer of store cards in the automotive sector.
In general store cards and co-branded credit cards are issued by retailers or travel related companies that have partnered with unrelated financial institutions to provide specific offerings.
CFNA is an exception to that pattern.
CFNA is a subsidiary of BF Goodrich.
Just from viewing the website of tire retailer Town Fair tire, both CFNA and competitor Synchrony appear to issue similar store card's for that retailer.
Card art for the two products on the website is similar.
I tend to believe that has meant that on at least one occasion that has led to a customer calling the wrong institution for customer service.

Credit One

Credit issuer whose primary focus is products for consumers who are rebuilding their credit.
Counterintuitively, while Credit One and Capitol One have similar logos and Capital One is better known, Credit One had the logo style first.

Credit Score

You do not have "one" credit score.
Very high level, a given consumer has approximately nine scores that could impact him or her.
Auto, mortgage, and FICO 8 scores from each of the three major credit bureaus.
Actually the number is greater than 3 per credit bureau but 3 per credit bureau gives you an approximate mental model.

Credit Union

Not-for-profit financial cooperative that provides lending and deposit services.
Generally limited to a field of membership.


Person in the business of selling used cars posing as an individual.
People in the business of selling automobiles for profit while posing as individuals selling their own automobiles is a common event.
In fact it is so common that many states have enacted legislation such that if in a given state you have sold more than a given number of vehicles in a given amount of time you are by definition in the business of selling automobiles and are expected to abide by any laws and regulations applicable to businesses that sell automobiles.
Google curbstoner yourstate to search for applicable laws in your state.
Theoretically you can filter out curbstoners before meeting them in person by asking questions such as: Spoiler alert: In practice it is not that easy. Curbstoners will give evasive answers if not outright lie.
Curbstoners do not respect the government and they will not respect you.


In a formal economics course, a currency would be a unit of exchange issued by a sovereign government or collection of sovereign governments.
With respect to credit and travel rewards programs, "currency" might refer to units such as American Express Membership Rewards, Citibank ThankYou Points, Chase Ultimate Rewards, and Delta SkyMiles.

Datapoint ( DP )

Rules in use by a credit issuer may not be fully transparent.
Consumers may try to provide each other information on internet forums so that they can better understand rules, regardless of whether they are explicitly stated or not.
If no one has the answer to a poster's questions, the response may be "Try it and see what happens. Be your own datapoint."
While especially during times such as the spring 2020 lockdown the sense of camaraderie from sharing datapoints can be enjoyable, be careful when posting personal information on internet forums.

De Minimus

Scenario that exists but can usually be ignored because it is not material.
For example when trying to meet spend for a credit card with a signup bonus having 25% return, the opportunity cost of not using an alternative card with a 2% return is de minimus.

Diners Card

One of the early if not earliest issuers of credit cards in the United States.
Currently closed to new applications in the United States.


Ability to distinguish between things, especially those having similar content or similar names.
For example, Chase Sapphire Reserve and Customer Service Representative could both be abbreviated as CSR.
If the abbreviation CSR is used in an internet post, the reader will need to determine which is being referred to from context.


US financial institution that is both a credit card payment network in the United States and the issuer of credit cards that use that payment network.
Account numbers start with 6.

Disreet versus Discrete

Disreet means hidden.
Discrete means separate.
If you choose to post an internet personals ad with the intent of cheating on your significant other, that is your business.
If you choose to do so while mangling the English language, that is my business.

Edge Case

Scenario that is not common but that you should be aware of, either for sake of completeness or because the impact is material.
For any one reader, a given piece of information could prove to be either decisive or a complete waste of time.
For example, understanding that revolving credit utilization impacts one's credit score will be important to almost all readers, whereas the impact of the All Zero Except for One strategy will vary enormously by reader.

Effective Annual Fee

Annual Fee minus benefits that can be seen as cash equivalents.
When calculating your personal Effective Annual Fee for a credit product be certain to make an allowance for rewards breakage and whether you are even likely to use a given benefit at all.
This will later be addressed in an upcoming Introduction To Credit Cards YouTube video.

Equifax ( EQ )

One of the three primary consumer credit reporting agencies in the United States.


Including all possible details and scenarios.
I will try to call out important edge cases that I can think of when covering a topic but I cannot address everything.
As such, the examples I provide will be non-exhaustive.

Experian ( EX )

One of the three primary consumer credit reporting agencies in the United States.

Fair Isaac Corporation ( FICO )

Creator of many of the credit score algorithms that have been widely adopted.

First Pencil

Initial offer presented by a car salesperson.
May or may not have any relation to fair market value.
For greater detail, navigate to Car Shopping > First Pencil.


Technique that car dealers use to encourage potential buyers to focus on payments instead of price of vehicle, trade-in allowance, and interest rate.
For greater detail, navigate to Car Shopping > Four-Square.

Gold Card

Without further context, that should refer to the American Express Gold charge card in the United States.
Plot twist: If you read enough travel forums, you will encounter threads that have unraveled because one or more posters have confused the American Express Gold charge card with the American Express Delta co-branded Gold credit card.
Note One: The Gold card that can be issued to authorized users of an American Express Platinum account has the same rewards structure as the Platinum card, not the standalone American Express Gold card.
Note Two: However many other credit card issuers also market cards branded as Gold cards. In those cases the Gold designation means... well it means whatever they want it to mean I guess.

Guaranteed Asset Protection ( Gap )

Gap insurance pays your LENDER the difference between what your insurance company will pay for a totaled vehicle and what you owe on it.

Hard Inquiry aka Hard Pull ( HP )

Request for a credit report for a consumer.
A hard pull is generally requested when a consumer applies for new credit.
There are some cases where a hard pull might not be requested, but in general do not apply for new credit unless you are prepared for hard pulls from one or more of the three credit reporting agencies.
A hard pull will impact a FICO score for 12 months and continue to appear on a credit report for an additional 12 months after that.

Hold The Gross

A car salesperson's primary responsibility to the dealership that employs him or her is NOT to demonstrate a given car's features.
His or her primary responsibility to the dealership is to Hold The Gross.
Holding The Gross means selling the car to you at the highest possible gross profit to the dealership.
The vehicle's manufacturer may be concerned with a given vehicle's features being demonstrated, but salespeople are employed by dealerships NOT manufacturers.

Included In Bankruptcy ( IIB )

Debt was included in bankruptcy filing.
Having an account with that creditor again will be ... creditor dependent.
After the debtor's credit score has recovered some creditors may be open to granting new credit whereas other creditors will indefinitely issue a denial with a reason of "Previous unsatisfactory relationship."
Even after the information has fallen off your credit reports from each of the three major credit reporting agencies, the creditor will still have its own internal records.

Income Verification ( IV ) aka Proof Of Income ( POI )

As part of the big bundle of paperwork that your mortgage lender will have you sign will be a form 4506-T form authorizing the lender to get a transcript of one or more years of your IRS returns.
When applying for a credit card or line of credit, your local bank or credit union might accept W2 forms or paycheck stubs.
If a nationwide issuer of credit decides it needs proof of income, there is a significant chance it may require a 4506-T form.

JP Morgan Chase ( Chase )

Among the very largest US financial institutions.
Mass-market premium credit card is the Chase Sapphire Reserve.
If you went through this glossary from the beginning to get to this point, you will have already read that the bank now known as Bank of America was once known as NationsBank which acquired Bank of America and then took on that firm's name.
An acquiring company taking on the name of a company that it acquires may be unusual, but it is far from unprecedented.
What is today known as JP Morgan Chase can be traced to bank consolidator Chemical Bank which acquired Chase Manhattan in 1996 and then took on the name Chase.
The acquisition of JP Morgan was to come in the year 2000.
Do you think navigating loopholes in the law is anything new this century or the one before?
Think again.
Chemical Bank was started as part of a manufacturing company in the 1820's because doing so was easier than creating a standalone bank.


( very large number of new accounts / last 24 months )
The meaning is that a particular individual has so many new accounts that he or she is far beyond the Chase 5/24 threshold.

Loyalty Program

An airline, hotel chain, or retailer may have a loyalty program that gives members discounts and/or other benefits.
For greater detail see: Travel > Loyalty Program.

Manufactured Spend ( MS )

Using a credit card to buy cash equivalents.
Not to be confused with minimum spend requirement.

Mass-market Premium Credit Card

All or at least almost all of the terms defined in this glossary are common terms.
Mass-market Premium Credit Card might be different.
I use the term mass-market premium credit card to mean higher-end cards that a typical worker with good credit in his or her prime earning years could realistically be approved for.
While JP Morgan Chase issues the JP Morgan Reserve ( in this case I do NOT mean the better known and more widely held Chase Sapphire Reserve ) card and American Express issues the Centurion card, those cards are far above mass-market.
Even for a medical doctor working as a general practitioner relying solely on his or her income as individual, the JP Morgan Reserve and American Express Centurion cards are quite likely out of reach.


One of the major credit card networks in the United States.
You as a consumer almost certainly do NOT owe Mastercard money.
If at any one point in time you have a balance on a card that runs on the Mastercard payment network, you owe a financial institution that is licensed to issue cards that run on the Mastercard payment network, not Mastercard itself.
Account numbers start with 5.

Material Information

Scenario or terms important enough to impact the decision making process.
For a 30 year old evaluating romantic partners, a prospect having $30,000 in retirement savings might not be material but his or her having $30,000 in credit card debt might be highly material.


If an odd number of data points, the middle datapoint.
If an even number of datapoints, the average of the middle two data points.
If you hear the term "median" come up in relation to credit scores, it will likely be in regard to a mortgage application.

Minimum Spend Requirement ( MSR, sometimes incorrectly abbreviated as MS instead of MSR )

When you apply for a credit card there may be a sign up bonus for spending a given amount in a given time.

Mortgage Score

Generally the particular score that matters is the mortgage score that is the middle score of the mortgage score offered by each of the three credit bureaus.
The middle score is the median NOT the average of the three scores.

Navy Federal Credit Union ( NFCU )

Financial institution whose focus is consumers with an affiliation with the United States military.
Walks like a duck.
Quacks like a duck.
It's a duck.
Navy Federal Credit Union is not merely a credit union, it is the nation's largest credit union.
Barring past late payments and/or defaults with Navy Federal, this credit union is known for more lenient credit underwriting than its competitors.
Note One: I expressly used the word lenient NOT generous.
Credit is a tool to be employed judiciously, not a gift to be frittered away.
Begging can be seen as negotiating from a position of weakness and thus can be counterproductive, but in this one case I will make an exception.
I would like to absolutely beg you to understand that just because any lender has lenient underwriting standards do NOT take that to be an invitation to spend recklessly.
Note Two: I introduced NFCU's field of membership as being consumers with an affiliation with the United States military, NOT merely those who specifically have an affiliation with the United States Navy.

No Pre-set Spending Limit ( NPSL )

Primarily applicable to charge cards.
No pre-set spending limit does NOT mean unlimited credit.
The maximum amount of credit that the issuer is willing to provide may vary over time, but it is reported to neither the consumer nor to credit bureaus.

Opportunity Cost

Alternative you give up when you make a choice.
For example: you receive an application in the mail for a credit card.
The credit card has an annual fee of $150 a year and a cash rewards rate of 3%.
$5,000 of spending times a rewards rate of 3% = $150
Does that mean that $5,000 is the breakeven point at which the rewards pay for the annual fee?
Going strictly by the math above, yes it does.
But let's add in some real world information.
There are many no-fee credit cards that have cash back rewards.
Let's say you already have a card that has 1.5% cash back.
In that case, the extra $150 annual fee is not providing you with 3% cash back, but merely an incremental 1.5% more than you are already getting.
That means your breakeven point would be $10,000 not $5,000.
We could do the math from scratch, but if I cut the rewards in half that doubles our breakeven value.
You may have noticed I setup the numbers in advance to make my explanation easy.
I assure you, when it comes to playing with numbers I am an absolute amateur compared to the professionals you will meet at an auto dealership.

Partial Zero Emissions Vehicle ( PZEV )

Regardless of your degree of environmental activism, buying a PZEV vehicle may merit consideration.
In order to sell vehicles in states such a California, manufacturers need to meet thresholds for environmental credits.
This can be done by either manufacturing vehicles that meet various standards or by buying credits from other vehicle manufacturers.
A benefit to the consumer of PZEV vehicles is that emissions equipment is warrantied to 150,000 miles or 15 years, whichever comes first.
Other components such as a turbocharger may also be included in the PZEV warranty.

Personal Guarantee ( PG )

Relevant to small business credit.
In order to grant credit to a small business, a credit issuer may require that an individual be liable for the debt if the business does not pay it.

Player Two ( P2 )

Domestic partner with whom one may coordinate optimizing credit applications and credit card rewards.
Select Credit > Player One / Player Two from this site's navigation bar for an example scenario.

Portfolio Loan

A portfolio loan is when a lending institution lends money and than retains ownership of the loan instead of selling it.
If you have watched the film "It's a Wonderful Life" from beginning to end then you have seen George Bailey explain how savers deposit money at Bailey Building and Loan and then those funds are loaned out to borrowers.
When the film was released, the process may have been that straight-forward.
In more modern times, when a loan is funded it may be sold one or more times and then bundled into securities.
The institution that originally funded the loan may or may not continue to service the loan regardless of whether the loan has been sold.
Servicing is the process of collecting payments and forwarding those payments to the owners of the loan.


If this were a technology blog, the term "Powerbook" might refer to a vintage Apple laptop computer.
However, this is not a technology blog.
In the context of consumer finance, "powerbooking" is when an auto dealership represents to lenders that a vehicle has features that it does not.
How common is it?
Well it is common enough that the practice has a recognized name.

Pre-Purchase Inspection ( PPI )

If you are seriously considering purchasing a used vehicle, I suggest in the absolute strongest possible terms that BEFORE you purchase any used vehicle that you have a pre-purchase inspection performed by a mechanic.
This definition presumes that you are purchasing a vehicle for your daily transportation.
If a given vehicle is intended as a toy for occasional use or as an investment, then I still suggest a pre-purchase inspection but addressing your particular needs is outside the scope of this blog.
In addition to being merely competent, the mechanic should routinely service the brand and ideally the particular model that you intend to purchase.
Expect to pay on the order of $100 to $200 for the pre purchase inspection.
A pre purchase inspection is NOT the same as the annual safety and emissions inspection that your state may or may not have.
Begin a quick conversation with your chosen mechanic before you make an appointment to even see a car.
If you are a considering a used European sports or luxury car that is out of warranty, or soon to be out of warranty, for your daily transportation personally I would hope that your chosen mechanic would say NO without even having seen the vehicle.
Have you ever had to replace a catalytic converter on a domestic or Japanese brand?
That Audi you are looking at with 75,000 miles likely has not one but two, and they are not cheap.
Why did I say 75,000 miles?
Because in the United States by default emissions components are warrantied to the lesser of 8 years or 80,000 miles.

Priority Pass

Product that provides consumers with access to airport lounges that Priority Pass has contracted with.
See further details on Travel > Priority Pass section of this site.

Private Mortgage Insurance ( PMI )

If you have less than a 20% down payment for a home, you may consider buying private mortgage insurance in order to get a mortgage.
While you are responsible for paying the monthly premium, the insurance is for the benefit of whoever owns your mortgage, not you.
Do not confuse PMI with products such as disability insurance which might provide payments to you if you are unable to work due to a medical condition.

Producer Price Index ( PPI )

The producer price index is a measure of wholesale inflation.
I actually do NOT need you to know this term.
However, I am including it because pre-purchase inspection has the same abbreviation, and if you are considering purchasing a used vehicle I STRONGLY suggest that you have a pre-purchase inspection performed.

Product Change ( PC )

Transfer credit account from one type to another type, if allowed by an issuer.
If permitted, a product change may or may not be restricted to and from cards within a product family, and will most very likely not allow either product changing from personal to business or business to personal.

Protected Against Commission ( PAC or PACK )

Gross profit the dealership must make before a salesperson can earn a commission on the remaining profit.
More common at used car dealerships than at new car dealerships but may still apply to some individual new car dealerships.
The dealership's books may say that a given vehicle cost the dealership $17,5000.
The dealer has the vehicle listed for an asking price of $21,499.
A particular salesperson's pay plan at a particular dealership is ( gross profit minus pack ) * 25 percent.
A customer agrees to pay $20,000 and the sales manager accepts the offer.
To calculate the salesperson's commission perform the following:
  1. Calculate Gross Profit According to the dealership
    $20,000 minus $17,500 for a gross profit of $2,500
  2. Subtract the PAC
    $2,500 minus $1,000 PAC leaves $1,500
  3. Calculate Commission
    $1,500 times 25% equals $375.


After a candidate for the Democratic or Republican party has won the nomination for his or her party's top elected position, for the remainder of that election cycle party officials might introduce the candidate by saying, "I present to you the next president of the United States!"
Whether or not party officials making the introduction actually believe the statement is irrelevant.
Such a statement falls well within the safe harbor of puffery.
If you make personal decisions assuming that the candidate will actually win the general election or that if elected the candidate will make good on his or her campaign promises, that is on you NOT the candidate or his or her backers.
For a discussion of puffery outside the field of politics, navigate to Car Shopping > Puffery on this site's menu.

Regulatory Capture

To quote comedian Lily Tomlin, "No matter how cynical you become, it's never enough to keep up."
A premise of regulatory capture is that even should some government agency be created with a good faith intention of protecting the general public from an industry, the agency will eventually be co-opted into protecting that industry from the general public. A significant contributor to regulatory capture is that staff with experience in a given industry will most likely come from that very industry and return to that industry after working in government. As such, the employees of the regulatory body are aligned more with the industry than the general public.
Why is regulatory capture included in this glossary?
Regulatory capture is not some fringe economic theory.
Rather, it is absolutely mainstream.
If you do not believe me, plug "Regulatory capture" into google.
As such, if you want to find someone interested in your economic well-being, I strongly suggest that you look in a mirror.

Residual Interest aka Trailing Interest

Generally, once you start carrying a balance on a credit card, for new purchases you lose the interest free grace period between when your statement closes and when the payment is due.
American Express has a feature called Plan It that can mitigate this issue.
Citibank also has a similar feature.
Make sure you understand these features should you choose to take advantage of them.
Speak to the issuer's customer support to clarify any questions.
Should you find yourself carrying a balance on a card that is not in a zero interest for new purchases promotional period, the simplest solution may be to put new purchases on another card that you pay in full every month.

Rewards Breakage ( Breakage )

A credit card may offer benefits to encourage the customer to subtract their value from the card's annual fee to arrive at a much lower effective annual fee.
Any one individual consumer may or may not be able to use the full value.
For example, a credit card may offer a monthly credit for some product or service, but use it or lose, a month's credit might not roll over to the next month.

Rewards Card

Credit card whose focus is earning cash, miles, or points.
The card may or may not have an annual fee.


When applying for credit, your application may get sent to numerous potential issuers of credit, each of whom will run your credit.
Especially true when you are applying through an intermediary such a car dealership as opposed to directly through a financial institution.
The worse your credit is, the more likely this is to be an issue.
Example: When applying for several car loans within a short enough period, if coded correctly the several credit inquiries should count as a single inquiry for purpose of your credit score.
Plot twist: The credit inquires may or may not actually get coded correctly.

Signup-Bonus ( SUB ) aka Welcome Offer

Incentive by a financial institution to a consumer to open an account.
Could be for either spending a given amount in a given time and/or paying the fee.

Sky Club

Branding for Delta Airlines airport lounges.

Slow Walk

If an insurance company, government agency, or other organization owes you some kind of benefit it might put up a series of delays hoping that you will give up, if not outright die.
Nothing nefarious, it is just business.
Wait, they are hoping that you will die so that they do not have to give you what is rightfully yours?
Actually that is pretty nefarious.

Soft Cap

If this website were a fashion blog, a soft cap would likely mean an article of clothing that you would wear on your head.
Outside of fashion, a soft cap might refer to a rule or limit that one can expect to be enforced with limited exceptions.
In the United States, the listed tuition prices charged by the colleges and universities that comprise the Ivy League represent a "soft cap" for what the rest of the higher education institutions may charge.
A "hard cap" may constitute a more strictly controlled rule or limit, but even then if you come from a sufficiently influential family, what may be a hard cap for the general population may be enforced quite flexibly for you.

Small-Business Card

A card targeted toward small business use.
The card will very likely require a personal guarantee and may or may not require pulling credit reports from one to three of the major credit reporting agencies.
Depending on the issuer, the card may or may not report on your personal credit report unless you pay late or outright default.

Soft Inquiry aka Soft Pull ( SP )

Request for a credit report from a credit reporting agency which will not directly impact a consumer's credit score.
Examples of soft pulls:
  1. A consumer requesting his or her credit report.
  2. An issuer of a revolving line of credit to a consumer may periodically conduct soft pulls to assess the financial health of the customer.
    While an issuer soft pulling your credit alone will not impact your credit score, if the issuer sees information it does not like, it may reduce your credit line or close an account completely.

Store Card

A credit product that can only be used at a specific retailer or group of retailers having the same owner.
An example of a store card would be the Synchrony issued Amazon.com store card.
The Amazon cards issued by American Express and Chase that run on the American Express and Visa payment networks respectively would more properly be called co-branded cards not store cards.

Subvented Financing

I do not need you to memorize the term but I DO need you to understand the concept.
While you may see zero interest rate loans advertised for a vehicle, auto manufacturers themselves do not have the ability to borrow money at zero percent.
Manufacturers must borrow money at whatever rate their credit rating will support.
The manufacturer might pay a third-party or captive financial company a fee to subsidize the rate charged to the consumer.
While an economist might argue that discounting a vehicle's price or discounting an interest rate to get to the same payment may net out to equivalent transactions, the vehicle manufacturer's marketing arm may view them very differently.
One point is that subvented financing allows the illusion that the vehicle can be sold at full price without subsidies from the manufacturer.

Swipe Fee

Fee paid by a merchant to accept a given card on a given payment network.
The fee will be on the order of 3% and there may or may not be additional fixed fees as well.


Spin off from GE Capital.
Known primarily for co-branded cards and store cards.
Prominent store cards issued by Synchrony are the Lowes store card and the Amazon store card.
Like other store cards, those two cards are only accepted at their corresponding retailers.
Do not confuse the Synchrony issued Amazon store card with either the Amazon Visa card issued by JP Morgan Chase or the American Express Amazon small business card.
Barring a financial institution outbidding another financial institution for a given product and card portfolio, do not expect to be able to product change between the three Amazon related cards.

Terms And Conditions ( T&C )

Document that governs account factors such as annual fee, interest rate, late fee, and sign-up bonus.
Your interest rate may be dictated by your credit profile at the time of account opening.
Given that, if you have inquires or negative information that will fall your credit report soon, consider waiting before applying for new credit.
If you believe that the information on this web site or any other third-party resource is in conflict with an issuer's terms and conditions, the issuer's terms and conditions are what matter.

TransUnion ( TU )

One of the three primary consumer credit reporting agencies in the United States.


Request for consumer credit report for an individual from all three major credit bureaus: Equifax, Experian, and Transunion.


Absolutely not a mainstream consumer finance term, but I hope to in some small way make it one.
I hope to dissect seemingly complex transactions into small pieces such that readers and viewers say "What? That is so simple. Is that all there is?"


Process of an issuer assessing risk and profitability for a financial product such as credit or insurance.

United Club

Branding for United Airlines airport lounges.

United Services Automobile Association ( USAA )

I may have overly strictly adhered to the full name ( abbreviation ) format on this definition.
I have never heard anyone refer to the organization as anything other than USAA.
USAA is a financial institution whose focus is consumers with a military affiliation.
Walks like a duck
Quacks like a duck.
Not actually a duck.
Despite that becoming an account holder requires being part of a field of membership, the part of USAA that provides banking type services is in fact a bank not a credit union.
Not a particularly meaningful difference, but pointing it out since periodically I hear people refer to USAA as a credit union.
Despite the fact that competitor Navy Federal Credit Union is a credit union and USAA is a savings bank, the field of membership for USAA is narrower than that for NFCU.
While most very definitely NOT legally correct, to employ one of the idioms of the day: USAA is credit union adjacent.
Notable point: as of this writing, USAA does not give customers the option of requesting product changes between credit card products.

US Bank ( USB )

Major Minneapolis, MN headquartered bank primarily serving the heartland states.
Not well known outside that region.
If you search the US Bank website for branches for even some highly populated east coast states, you may receive the following:
"Sorry, no U.S. Bank locations were found in this area. To find additional ATMs without U.S. Bank ATM fees, select Show MoneyPass® ATM Network locations when you search."
Mass-market premium credit card is the US Bank Altitude Reserve.
Among the more conservative issuers of credit.
The bank's stock ticker symbol is USB, but there is some danger in referring to the bank by that abbreviation without additional context.
The company could either be mistaken for a flash drive, or dyslexic readers might think you mean Union Bank of Switzerland.
In fact globally Union Bank of Switzerland is so much more well-known than US Bank that if you type USB even many non-dyslexic readers may assume that you transposed the characters in the abbreviation / ticker symbol.


Input into your credit scores.
Lower is better than higher.
Credit used divided by credit limit.

Vantage Score

Credit score provided to consumers but used much less widely than FICO scores by credit issuers for the purpose of granting credit.
While presented as a numeric value, a consumer may be better served by viewing a Vantage Score as a more qualitative indicator of poor, fair, good, or excellent credit.
Do not expect a formula that can translate a Vantage Score into any one Fico score.

Vehicle Identification Number ( VIN )

17 characters that uniquely identifies a vehicle.
While they are called vehicle identification numbers, they actually consist of letters and digits, not merely digits.
For two identically specified new vehicles, the vehicle identification numbers may be all that can distinguish between them.
For two worn out but comparably equipped vehicles being sold by a curbstoner, the subset of characters their VIN's share may be most of what remains that the vehicles have in common.

Venn Diagram

Tool used to convey the unions and intersections of criteria.
Not a consumer finance term, but in some of the pages and videos to come we will be using Venn diagrams to convey concepts.


One of a few credit card payment networks in the United States.
You as a consumer almost certainly do NOT owe Visa money.
If at any one point in time you have a balance on your account, you owe it to a financial institution that is licensed to issue cards that run on the Visa payment network, not the Visa payment network.
If you have a credit card on that runs on the VISA payment look at it.
You will see that the account number begins with a 4, as do all other VISA credit cards.

Wells Fargo

California based bank.
Among the largest banks in the United States.
Wells Fargo does not currently offer a mass market premium card, but
The Wells Fargo Propel card was a competitive product in the overall credit card market until the card was discontinued.
So far consumers that held the card before it was discontinued have been allowed to keep it.
This bank has a track record of being in trouble with federal and state regulators.
You will need to use your judgement to decide whether applying for an account with Wells Fargo or any other financial institution makes sense for you.
Example scenario: a job loss during the 2008 recession may have caused you to miss payments or even have charge offs with JP Morgan Chase or a bank that Chase acquired.
Since then you have rebuilt your credit report and put aside an emergency fund.
Even with late payments or charges offs being too old to appear on any of your Experian, Equifax, and TransUnion credit reports the creditor will still have its own internal records.
In addition, institutions that acquired the original creditor will still have the account history regardless of whether it has fallen off credit reporting agency reports.
Even with your now excellent credit score, Chase might still deny your application with a reason such as "unsatisfactory previous experience".
In such a situation you might be more open to having an account at Wells Fargo than you might otherwise be.
Another scenario would be if you have never had a late payment with any bank, but you are at the maximum credit exposure that one or more of the banks that you currently use allow.
Notable point: This bank does not offer product changes in the same manner that many other banks do.
If you request a product change for a Wells Fargo account and the request is approved, your credit reports will show the previous account being closed and a new account being opened.
For most other banks that offer product changes, your credit reports would continue to show just one account with the opening date of the original account.


365 days for a non-leap year.
366 for a leap year.
Please review terms of account to understand whether calendar year or cardmember year is applicable for a particular fee or benefit.
For example:
Some American Express charge and credit products have an airline travel credit.
As of this writing, those American Express credits are for a calendar year.
In contrast, for new accounts the travel credit for the Chase Sapphire Reserve credit card is per cardmember year.

Yoshida Kōgyō Kabushiki gaisha ( YKK )

To close the glossary, I will introduce "Yoshida Kōgyō Kabushiki gaisha".
According to Wikipedia, "Yoshida Kōgyō Kabushiki gaisha" translates to "Yoshida Manufacturing Corporation".
Since childhood you may have come across zippers with the letters "YKK" on them.
YKK is a Japanese company that dominates the world's zipper manufacturing.
Now you know.