Credit Card Glossary

Annual Fee Some credit card issuers may charge you a yearly fee in addition to the interest rate on outstanding balances.

Annual Percentage Rate (APR) The APR is the rate of the total charge for credit expressed as the law requires, enabling you to compare the rates of credit card issuers. The total charge for credit includes interest, any annual fee payable and the handling fee in the case of a cash advance.

Balance The amount of money you owe the credit card issuer. This includes purchases, balances transferred, interest, any transaction charges and fees.

Balance Transfer Some credit card issuers allow you to transfer the balances from other credit cards, store cards and small loans. With some credit card issuers if you transfer the balance in the first 6 months an introductory rate will apply.

Cash Advance The cash you can withdraw at an associated ATM machine or bank. The interest rate on cash advances tends to be higher than for purchases and does not include a grace period, it can also include a handling fee.

Cash Back Rewards A percentage of money you can earn from the credit card issuer every time you use your credit card for purchases.

Credit Limit The maximum amount of credit you can acquire on your credit card. From time to time the credit card issuer may increase or decrease your credit limit in relation to your card usage.

Credit Referencing A record of your credit history that is used to help credit card issuers judge your credit worth. It shows whether you pay your bills on time, your credit balances and whether or not you have debts.

Cash Withdrawal The cash you can withdraw at an associated ATM machine or bank. The interest rate on cash advances tends to be higher than for purchases and does not include a grace period, it can also include a handling fee.

Interest Rates The interest rate as a percentage that is charged on outstanding balances on a monthly basis. Credit card issuers allow a certain time period, usually around 50 days in which you can repay your balance without being charged interest.

Introductory Rates The APR charged by the credit card issuer during the first months of service. Introductory rates are a promotional tool and the interest rate will increase to the normal amount after the fixed time period, usually around 6 months. Introductory rates can include balance transfers, purchases and / or cash withdrawals.

Minimum Payment This is the minimum amount you have to pay the credit card issuer each month on outstanding balances. It is most commonly expressed as a percentage of your outstanding balance, or the full amount if your balance is under a certain amount, usually around Ł10.

Outstanding Balance This is the balance on your credit card that has not been paid from month to month. You will be charged interest on this balance until you pay it off in full.