"Bleed" is a printing term used to indicate the area that will be trimmed off after the job is printed and cut down to the finished size. Since the bleed extends 1/16" all around the card, your document set-up should be 1/8" taller (1/16" on top and 1/16" on the bottom) and 1/8" wider (1/16" on the left and 1/16" on the right) than the finished size of the card.
Since the bleed area will be trimmed off during the cutting process, there can be no text or other important information in the bleed area. Furthermore, we require an additional 1/16" safety margin. Although the background image, photo or texture used on the card must extend to the FULL BLEED SIZE of your business card set-up, all your text and important information must be contained in the live area (see example below). The distance between the live area and the edge of the card is 1/8" (1/16" bleed which will be cut-off, and 1/16" safety margin). The examples below show both a correct and incorrect document set-up. .
Critical to the design of your card is an inside text margin from the trimmed edge of the card, shown above in the examples as the "Live Area". Typically, text margins should be a minimum 1/16 (0.0625) inch from the trim line (or the trimmed edge of the card). Inside text margins apply to all cards with or without bleeds, and also apply to those important graphics which SHOULD NOT be trimmed away during the cutting process.