Triggering Term

DEFINITION of 'Triggering Term'

A word or phrase that when used in advertising literature requires the presentation of the terms of a credit agreement so that individuals can compare credit offers on a fair and equal basis.

Open-end and closed-end credit each have a set of triggering terms associated with them; if a single one is used in advertising material, then the full set of credit terms must also be displayed so as not to confuse or deceive consumers.

Triggering terms are set and monitored by the Federal Trade Commission, in the United States.

BREAKING DOWN 'Triggering Term'

Credit literature and advertising must abide by the Truth In Lending Act passed in 1969, which requires that lenders disclose key terms of an agreement, such as how finance charges are computed, when a charge can be imposed and charges computed as an annual percentage rate.

Triggering terms help clarify the conditions under which a consumer is borrowing money. It is important to read carefully all of the disclosures to get a true picture of the cost of borrowing money. Being oblivious to the terms of a loan and the charges that can be incurred can cause a consumer to become buried in debt.

RELATED TERMS
  1. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
  2. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
  3. Good Credit

    A qualification of an individual's credit history that indicates ...
  4. Credit Mix

    The types of accounts that make up a consumer’s credit report. ...
  5. Available Credit

    The unused portion of an open line of credit, such as a credit ...
  6. Consumer Advisory Council - CAC

    A legislative body established by Congress in 1976. The Consumer ...
Related Articles
  1. Credit & Loans

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  2. Credit & Loans

    Understanding Credit Risk

    Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt.
  3. Personal Finance

    Understanding Credit

    Credit has three common meanings in the financial world.
  4. Credit & Loans

    Time to Accept Credit Card Offers Again?

    How much you could get and whether to respond
  5. Credit & Loans

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  6. Options & Futures

    How To Establish A Credit History

    Can't get a credit card without a credit history, and can't get a history without a card? Break the Catch-22.
  7. Credit & Loans

    Build Your Credit Score

    Here are four good ways to build your credit score when you're starting from scratch. Do it right and you'll end up with excellent credit.
  8. Credit & Loans

    Use Your Credit Card To Boost Your Credit Score

    Misusing credit cards can blow your credit – but using them well can boost your score. How to grow a history, fix bad credit, make good credit even better.
  9. Mutual Funds & ETFs

    Investing In Credit Card Companies

    This investment requires keeping an eye on consumer indexes and the overall health of the economy.
  10. Credit & Loans

    Best Credit Cards For People With Poor Credit Scores

    There are still ways you can build credit with a credit card, even if you have bad credit.
RELATED FAQS
  1. What is the difference between "closed end credit" and a "line of credit?"

    Find out about the difference between closed-end credit and lines of credit, and how both closed- and open-end credit is ... Read Answer >>
  2. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  3. What's the difference between a credit bureau and a credit rating agency?

    Learn the differences between credit bureaus that report on individuals' creditworthiness and credit rating agencies that ... Read Answer >>
  4. Is it possible to have a credit limit that's too high?

    Avoid these pitfalls when working with high credit limits, and learn how to increase your credit score by increasing your ... Read Answer >>
  5. What is the difference between available credit and credit limit?

    Explore the difference between available credit and credit limit and the implications different account balances have on ... Read Answer >>
  6. Are APRs different in different countries?

    Learn about the term APR and how it is used in the United States and other countries. Explore why different lenders charge ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center