College Student Guide to Credit Card Terms

You're in college. It's a time of fun but also one of new responsibility.  You may be largely or solely responsible for your finances for the first time. Making and sticking to a budget could be on your mind. Managing your credit, and building your credit history should also be a priority.  You'll most likely be offered credit cards on your campus.  Read through the terms and definitions in this glossary so you can make an educated decision on which credit card is the right one for you.

Additional Cardholder

When you have a credit card, it is often possible to add an additional card to the account for use by someone else. The main cardholder remains responsible for making payments on all charges made, whether by the original cardholder or the additional cardholder.

Authorized User

A person given permission to use a credit card account.

Co-Signer

A joint signer of a credit card application with the principal applicant. Should the principal applicant default on what he owes, the co-singer is responsible for paying the balance due.

Credit History

A record of a person's debt payments.

Joint Account

A joint account is a bank account equally shared by two or more individuals. Parties involved all share the associated rights and liabilities of the account and are regarded by law as co-owners of the account. This means that if anything happens to the account, such as defaults, overdrafts and fraud, all parties are affected.

Linked Transfer Account

A linked transfer account is one in which a consumer's checking account is linked to another account at the same bank. The linked account can be a savings or a credit card account. If a checking overdraft occurs, the bank will transfer money from the customer’s other accounts linked to the checking account.

Piggybacking

Piggybacking is the act of improving your credit score or rating by becoming an authorized user on someone else's credit card. By doing this, you receive all the benefits of having good credit without actually having built any of the credit yourself. It is most often used by parents with their children or with spouses. In recent years, the practice has become controversial because companies sprang up to act as middlemen, matching up strangers -- one with bad credit, one with good.

Prepaid Cards

A prepaid card is a form of secured card that is tied to a previously deposited cash balance. Purchases made with prepaid cards are checked for approval against existing funds. Essentially a stored-value card, they usually carry major association logos and can be spent in the same way.

Secured Credit Card

Credit card used by people trying to rebuild their poor credit or by beginners establishing their credit. The cardholder's savings deposit or bank account guarantees payment of the outstanding balance if he defaults on payments. Credit line will represent 50-100% of the security deposit. Many have application and processing fees.

Subprime Credit Card

A credit card designed for those with little credit history or bad credit. These types of bad -credit credit cards typically carry higher fees and interest rates to offset the increased risk involved with subprime lending.