Compare Online

Credit Card Jargon Explained

• Annual fee - some credit card providers will charge an annual fee on their products. This is sometimes made to cover any expenses such as administration costs. Note that many credit cards today do not carry an annual fee.
  
• APR - this important acronym stands for the words ‘annual percentage rate’. APR includes not only the interest rate that will be charged upon your card but also any additional fees that might be charged.
  
• ATM - this stands for ‘automated teller machine’, in other words, a cash machine. You can withdraw cash from an ATM with both credit cards and debit cards.
  
• Cash advance - as well as purchasing goods or paying for tickets, you can also use your credit card in order to withdraw money- either over the counter or at an ATM. There is usually a charge for such a service.
  
• Cashback - with debit cards such as the Switch or the Solo you can make purchases and request money back when you pay for your goods. You will be charged for your cash as well as the cost of the goods and will be given your requested money back with your receipts.
  
• Credit card - a plastic card that allows the cardholder to pay for goods or services using a credit account.
  
• Credit limit - your credit limit is the maximum amount of money that you are allowed to spend on your credit card.
  
• Credit reference agency - credit reference agencies provide personal and individual credit reports on individuals throughout the UK. These reports are used by credit card providers and lenders in order to assess their applicants.
  
• Credit scoring - this is the process used in order to assess someone who is applying for credit of any form, whether it be a credit card or a loan. Many factors will be considered including current income and past credit record.
  
• Interest - interest is the word used to describe the fee that you are charged for the privilege of credit. It will accrue at a designated percentage of the sum that you have borrowed which you will be charged for on top of the credit you have been granted.
  
• Interest free period - this term is used to describe the period during which you will not be charged any interest for credit card transactions. This period is usually around 25 days and effectively allows you to use credit for free, so long as you pay off the balance within the specified period.
  
• Introductory rate - many credit cards today come with the special offer of a temporary lower APR, referred to as the introductory rate.
  
• Issuer - this is another word for the credit card provider.
  
• Merchant - this term is used to describe any business or firm that accepts payment for goods and services by credit card.
  
• Overseas transaction - this word is used to describe credit card transactions that are made abroad. Overseas transactions will appear on your statement in pounds sterling. There is usually a charge for this service.
  
• PIN - this stands for ‘personal identification number’. You will be issued with a PIN so that you can use cash machines in order to withdraw money.