Complete Credit Card Terminology
Not sure what APR means? Or what balance transfer refers to?
Here is a complete credit card terminology and glossary that you can use on a daily basis.
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| AER | Annual equivalent rate, the rate rate over a year if amounts are compounded. Typically used for savings accounts where interest is paid monthly. The AER assumes all interest paid is left in the account and so the next months interest is paid on the pervious months interest compounding the amount. |
| APR | Annual percentage rate, a standardised rate to compare more accurately between different cards. APR includes all fee’s and costs. APR means the annual percentage rate of charge for credit determined in accordance with the Total Charge for Credit Regulations. |
| Affinity Card | A credit card offered by two organisations. One would be a financial institution who would normally issue their own cards, the other organisation would be non-financial. Most often this would be a charitable organisation and the card would offer a donation to the charitable organisation based on the consumers use of the card. It may simply be a non-financial but profit making company such as Hilton and their HHonors card offering benefits with the Hilton group based on the card use. |
| Annual Fee | A fixed amount (normally) charged once a year for the use of the credit card. |
| Balance Transfer | A lump sum amount transferred from a credit card, bank account or similar to another credit card. This would normally be done to take advantage of low rates being offered specifically for balance transfer by a particular credit card brand, or to simply consolidate outstanding debts. |
| Cash Advance | Cash withdrawn from cash machine (ATM) |
| Cash Back | An amount of money paid by the credit card company into your account based on your purchases and possibly other transactions. In affect giving some of the money you have spent back to you. |
| Charge Card | Card requiring the outstanding balance to paid by the agreed date and no amounts can be carried over to the next month. |
| Charity Cards | True affinity cards. |
| Chip and PIN | New technology replacing the use of signatures at counters with a keypad and a perosnal identification number entered by the card holder. |
| CIFAS | The fraud avoidance system. Developed in consultation with the office of fair trading and the office of the information commissioner. It aims to detect and prevent fraud. A CIFAS warning on your credit record indicates your name and or address has been used in conjunction with a fraudulent application. It means anyone reviewing your credit history would be warned to validate your details and application. it is not an indication that you have personally been involved with fraudulent application. |
| Consolidation | Transferring debts or balances from two or more areas and placing them under one card or loan. Advantages being easier management, possibly lower interest rates and the ability to restructure the period of repayment possibly lowering monthly outgoings. |
| Credit | Credit is an agreement between a lending organisation such as a bank, or credit card company and you, the consumer seeking to borrow. The result of the agreement is that you receive cash for your own use with terms set for repayment. |
| Credit Limit | The maximum amount of outstanding balance you are allowed to reach on your credit card. |
| Credit Reference Agency | A company that gathers information on your credit history and supplies it to financial institutions. |
| Credit Score | A rating given based on your credit history. Information on your past financial history and related personal facts are held by agencies and provided to institutions in order for them to evaluate your potential risk when providing you with credit. |
| Debit Card | Used in conjunction with a bank account. You present it when paying in the same way as a credit card, the difference being the credit limit will be the amount you currently have in the bank account. This means its fine for real time payments but wont be accepted to guarantee say a reservation since it wont be known if you’ll actually have funds to cover the reservation in the future. |
| EAR | Effective Annual Rate (EAR), Is the real annual cost of an overdraft or Loan, stated as an annual rate, which takes into account how often interest is charged to the account. All other charges, such as arrangement fees must be shown separately from the EAR. |
| Flexible Credit Card | Accucard, Create Card type credit cards where the actual configuration can be altered by the user. |
| GAIN | Gone away network information. Network through which lenders share information on customers with debts who have moved home without telling their lenders of a forwarding address. Information may include recently known addresses. |
| Gold Card | Normally it means the card has additional benefits over and above normal credit cards and requires you to have a higher credit rating than for the basic card. In practice given the wide variation in offers and credit requirements by different brands it really is relative to the other cards being offered by the same brand. |
| Introductory Rate | A special promotional rate for consumers applying for and being accepted for a particular credit card for the first time. |
| Mastercard | One of the major institutions responsible for facilitating the infrastructure allowing the flow of cash by electronic means. Accepted at 32 million outlets worldwide. 900,000 + ATM’s worldwide. |
| Minimum Repayment | The lowest amount that can be paid towards an outstanding balance. Can be a fixed amount or percentage of total. |
| P.A. | per annum |
| PIN | Personal identification number used for ATM’s and other services. |
| Platinum Card | Normally it means the card has additional benefits over and above normal credit cards and gold cards and requires you to have a higher credit rating than for the basic or gold card. In practice given the wide variation in offers and credit requirements by different brands it really is relative to the other cards being offered by the same brand. |
| Purchase Protection | Schemes that will provide various levels of cover for goods purchased with your credit card. |
| Secured Credit Cards | A credit card normally used by those with a poor credit history and now trying to rebuild their credit rating. The credit limit is actually funds that you have previously deposited. It is in affect much like a debit card but with the benefits of a credit card. |
| Standard Rate | The current long term rate of a credit card disregarding special time limited promotions. |
| Store Card | Credit cards issued by stores for use within that store only. |
| Typical Rate | credit cards will offer a range of APR interest rates according to your personal circumstances, however in most cases users are offered the same rate which is termed as being the Typical Rate. Under the Consumer Credit (Advertisements) Regulations 2004 the typical rate is where at least 66% of applicants would expect to receive that rate. |
| Unsecured Credit Cards | The normal type of credit card that does not require it to be pre-funded. |
| Variable | where the interest rate offered is liable change it is described as a variable rate. |
| Visa | One of the major institutions responsible for facilitating the infrastructure allowing the flow of cash by electronic means. Accepted at 20 million outlets worldwide. 800,000 + ATM’s worldwide. |