Reference

Glossary of debt and consumer-credit terms.

The vocabulary that turns up in CFPB consumer materials, AFCPE counselor coursework, and credit-card statements. Each entry is short and links to longer treatment where one exists.

AFC®: Accredited Financial Counselor. The professional credential administered by the AFCPE (Association for Financial Counseling & Planning Education).
APR: Annual Percentage Rate. The annualised cost of borrowing including interest and certain fees, as defined by US Truth in Lending Act regulations.
Avalanche method: A debt-payoff method that orders debts by APR, highest first, and directs all extra payments to the highest-rate debt. Mathematically optimal. See the snowball vs avalanche page.
Bankruptcy (Chapter 7): US consumer bankruptcy involving liquidation of non-exempt assets and discharge of most unsecured debt within months of filing.
Bankruptcy (Chapter 13): US consumer bankruptcy involving a 3–5 year court-supervised repayment plan, with discharge of remaining unsecured balance at plan completion.
CARD Act: Credit Card Accountability Responsibility and Disclosure Act of 2009. Established payment-allocation rules favourable to borrowers and standardised statement disclosures. See the credit cards page.
Cascade: The mechanic by which a freed-up minimum payment from a cleared debt rolls forward into the focus payment on the next debt. The engine of both snowball and avalanche.
CFPB: Consumer Financial Protection Bureau. The US federal agency overseeing consumer-financial-services regulations, including credit-card and debt-relief rules.
Charge-off: An accounting status applied by an issuer when a debt has been delinquent 180+ days. The debt is reported as charged off but typically remains owed and may be sold to debt-buyers.
DMP: Debt Management Plan. An NFCC-affiliated counselling-agency programme that consolidates payments and negotiates lower APRs on multi-card debt. See the negotiation page.
FBS™: Financial Behavior Specialist. A certification administered by the Financial Therapy Association covering the behavioural-finance dimensions of household financial counselling.
FDCPA: Fair Debt Collection Practices Act. The US federal law governing third-party debt collectors’ conduct and the borrower’s right to debt validation.
FICO score: The proprietary credit-scoring model from Fair Isaac Corporation used by most US lenders. Range 300–850; utilisation is approximately 30 % of the score.
Forbearance: A temporary pause in payments. Federal student loans offer statutory forbearance; interest typically continues to accrue during the pause.
Grace period: The interest-free window on credit-card purchases when the prior statement is paid in full. Suspended when a balance is carried.
Hardship plan: A temporary issuer-offered programme reducing APR and monthly payment in exchange for the cardholder agreeing not to use the card. Not advertised; must be requested.
IDR: Income-Driven Repayment. A category of US federal student-loan repayment plans (SAVE, PAYE, IBR, ICR) that cap monthly payments by income. See the student loans page.
Minimum payment: The smallest amount required by the issuer to keep an account in good standing. For credit cards, typically the greater of a flat dollar floor or 1 % of principal plus the month’s interest plus fees.
NFCC: National Foundation for Credit Counseling. The largest US non-profit credit-counselling network, with member agencies in most states.
Penalty APR: An elevated APR (often 29.99 %) applied by issuers after a 60+ day delinquency. Restored to standard APR after six consecutive on-time payments under CARD Act rules.
PSLF: Public Service Loan Forgiveness. A US federal programme forgiving the remaining balance on Direct Loans after 120 qualifying payments while in qualifying public-service employment.
Settlement: An agreement to resolve a debt for less than the full balance. Carries credit-score, tax, and lawsuit-risk implications.
Snowball method: A debt-payoff method that orders debts by balance, smallest first, and directs all extra payments to the smallest debt. Higher empirical completion rates than avalanche.
Statute of limitations: The legal time limit (3–6 years in most US states for credit-card debt) after which a debt cannot be enforced through the courts. Making a payment may restart the clock.
Universal default: The (largely deprecated post-CARD-Act) practice of an issuer raising APR on a card based on delinquency at a different issuer. Restricted under current rules.
Utilisation: Credit-card balance as a percentage of credit limit. A major FICO scoring factor; under 30 % is the working target for healthy credit.