CREDIT CARD JARGON BUSTER
The amount of jargon that surrounds credit cards is immense, and new terms are being thought up all the time. See below for an explanation of the most commonly used terms.
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- STATEMENT DATE
- INTRODUCTORY RATE
- BALANCE TRANSFER
- ANNUAL PERCENTAGE RATE (APR)
- CASH ADVANCE
- CASH ADVANCE RATE
- CASH BACK
- CREDIT LIMIT
- ANNUAL FEE
- OVERSEAS TRANSACTIONS
- WITHDRAWAL LIMIT
- MINIMUM PAYMENT
- CARD ISSUER
- CHIP AND PIN
- CREDIT SCORING
- INTEREST
- INTEREST-FREE PERIOD
- MINIMUM PAYMENT
- OUTSTANDING BALANCE
- PATMENT PROTECTION INSURANCE (PPI)
- STATEMENT
STATEMENT DATE:
The date that your credit company compiles, totals, prints and issues the statement of that month's outstanding debt; not necessarily the date that you actually receive the statement.
INTRODUCTORY RATE:
Many providers offer special introductory rates to gain your business. For instance; and introductory rate of 0%, which then reverts back to a regular rate after a certain time.
BALANCE TRANSFER:
Credit card companies often offer balance transfers, so you can move your debt to another card and take advantage of 0% (or very low) introductory offers.
ANNUAL PERCENTAGE RATE (APR):
This is the percentage rate of interest calculated on an annual basis. Also referred to as the 'usual percentage rate' indicating that it is the rate that will be applied after an introductory offer period has ended
CASH ADVANCE:
When you use a credit card account to obtain cash.
CASH ADVANCE RATE:
The rate of interest charged for credit card transactions that involve the withdrawal of cash - across the counter in a bank, or from a cash dispensing machine etc.
CASH BACK:
Some cards offer a 'reward' of giving you anything from 0.1% - 2% of the card purchase amount back. However, interest rate and the terms and conditions for cash back schemes vary significantly between card companies.
CREDIT LIMIT:
The maximum amount you may owe through spending on the card. If you go over this limit, your card may be refused and you may also have to pay extra charges.
ANNUAL FEE:
The amount that some companies charge for using their card. Not all cards have this charge.
OVERSEAS TRANSACTIONS:
An amount that some companies charge when you use the card abroad, because of converting the currency.
WITHDRAWAL LIMIT:
This is the maximum amount of cash advance that you will be allowed to Withdraw at a cash machine or over the counter in a bank, on any one day.
MINIMUM PAYMENT:
This is the amount that you MUST pay off each month. Generally, this will be a percentage of the credit card statement balance.
CARD ISSUER:
The bank, building society, store or company that provides your credit card.
CHIP AND PIN:
A unique four-figure number which is provided for your use only, and must use when you spend with your card.
CREDIT SCORING:
A system which is used to decide whether to provide you with a card, and what your credit limit should be. Credit scoring works by awarding points to the information you provide on your application form and to the information recorded on your credit report (held by a credit reference agency).
INTEREST:
The amount you'll pay on any money you still owe after the interest-free period each month.
INTEREST-FREE PERIOD:
The time between when you buy something on the card and the date when you must pay your monthly bill. This can be 50 days or more and is interest-free. So if you settle your bill in full every month, it's free borrowing.
MINIMUM PAYMENT:
The amount you must pay each month to keep your account in order.
OUTSTANDING BALANCE:
Any money you owe on your card.
PATMENT PROTECTION INSURANCE (PPI):
An insurance policy that can pay an agreed amount if you're unable to earn because of illness or redundancy. This can therefore help to keep up your payments to the card.
STATEMENT:
Your monthly credit card bill that shows what you've spent, what you owe, the minimum you must pay and the latest date you can pay it.