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Glossary

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  • Household Income
    Household income refers to the total income, before taxes and other deductions, of all the people living in the household who are aged 15 and older. Residents of the household do not have to be related. Credit issuers also use the term to refer to the combined incomes of people who live in the same household who are applying for a joint loan or credit card. Credit issuers place a great deal of emphasis on household income when deciding whether or not to extend a loan, and under what terms.
  • Interest Free
    Interest free refers to a period of time when no interest is charged on a loan. Interest free periods offer several advantages to customers. For example, you could transfer a balance that you owe on a credit card that you are paying interest on to one that offers an interest free period, thus gaining more time without fees in which to pay off your debt. But be sure to find out when the interest free period ends, and what the APR will be; credit cards offering interest free periods often come with high APRs that kick in after the interest free period ends.
  • Interest Rate
    The interest rate is the fee charged to the borrower by the credit issuer for the loan. The interest rate is usually an annual percentage of the amount loaned. Interest rates can be fixed or variable; fixed interest rates can revert to variable after a certain time has passed.
  • Introductory Rate
    An introductory rate is a short-term low rate of interest offered by credit card companies to entice new customers. After a period of time, usually about six months, the introductory rate ends and the regular interest rate kicks in. An introductory rate might also be revoked if you fail to meet the terms of the loan, such as the payment schedule.
  • Joint Credit
    Joint credit refers to credit that is extended to two or more people. The amount of credit issued is based on the combined incomes, assets and credit histories of the applicants. The holders of joint credit are both responsible for the debt, which can become a concern in situations such as divorce proceedings, as one partner may be held responsible for the debts incurred by the other partner.
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