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Cross-dresser/cross-dressing. (1) The most neutral word to describe a person who dresses, at least partially or part of the time, and for any number of reasons, in clothing associated with another gender within a particular society. Carries no implications of 'usual' gender appearance, or sexual orientation. Has replaced transvestite, which is outdated, problematic, and generally offensive since it was historically used to diagnose medical/mental health disorders.
Eventually, the transvestite label fell out of favor because it was deemed to be derogatory; cross-dresser has emerged as a more suitable replacement (GLAAD, 2014b).
It should be noted the term transvestite is often considered an offensive term.
A variety of derogatory terms are still used to describe any aspect of the transgender condition. [...] The term transvestite being older [than cross-dresser] and associated with the medical community's negative view of the practice, has come to be seen as a derogatory term. [...] The term cross-dresser, in contrast, having come from the transgender community itself, is a term seen as not possessing these negative connotations.
Trannie is a word much like fag or nigger. It may be permitted in conversation between members of the same group but it is deemed an insult when applied to a transsexual by someone who is not transsexual. Transvestite is deemed a derogatory term when applied to a transsexual. Indiscriminate use of these three words, along with the others, shows a lack of training in and understanding of minority relations.
The term transvestite should not be considered to be a safe term, and should certainly not be used as a noun, as in 'a transvestite'. Instead, and only when relevant, the term trans person should be used. [...] There are some people who have reclaimed the word transvestite and may also use the word tranny or TV to refer to themselves and others. [...] The term cross-dressing too is somewhat outdated and problematic as not only do many fashions allow any gender to wear them -- at least in many contemporary Western societies -- but it also suggests a strict dichotomy being reinforced by the person who uses it.