Credit Card Glossary of Terms

Annual Percentage Rate (APR)
The rate at which you will be charged interest on your credit card on a yearly basis. You can use the APR to compare the interest rates between different credit cards.

Additional Cardholder
This facility will enable you to add another named person to your credit card account. The credit card service provider will issue them with a credit card which enables them to make purchases and withdraw cash advances from your account; however you are still liable for repayment of all their transactions and service fees.

Airmiles
A loyalty programme associated with your credit card account which enables you to accumulate points whenever you use your credit card. These points can then be redeemed to buy flight tickets or purchase other products which are linked to the loyalty programme.

American Express
A global financial services company which offers products like credit cards and travellers cheques to its customers. Unlike Visa and Mastercard credit cards, American Express issues its own credit cards and is responsible for its own relationships with retailers. It is also sometimes referred to as AMEX.

Annual Fee
Not to be confused with the interest rate charges (APR) on purchases, the annual fee is a basic service fee which is charged on an annual basis.

Available Credit Balance
The unused balance of your credit limit. It excludes any uncleared payments to your credit card account.

Balance Owing
This figure is the difference between all the debit and credit transactions on your credit card account as of the specified date.

Balance Transfer
The total amount owing on one or more credit cards which is moved to another credit card account.

Balance Transfer Fee
The fee which is charged by a credit card company when moving the outstanding balance from one credit card account to another. The fee varies between credit card companies and can be between 1% and 5%; while some companies do not charge a balance transfer fee at all.

Cash Advance
A cash loan from a credit card company. A customer can either withdraw cash from their credit card account using an ATM or via a bank withdrawal.

Cash Advance Fee
The fee charged by the credit card company on all cash withdrawals. The fee can be up to 3% of the amount withdrawn and will accrue from the date of the cash advance.

Cash Back
Some credit card providers offer a cash back incentive which means that they return a percentage of the customer's total spend over a set period of time. It equates to a discount on the total purchases.

Closed Account Fee
The fee that some credit card providers charge if a customer closes their credit card account within a certain time period after opening the account. This fee is variable depending on the provider and when the credit card account is closed.

Credit Bureau
An organisation that collects information regarding a customer's spending and payment behaviours. This information is then sold to credit card and loan companies in the form of a credit report.

Credit History
A record of your payment history and outstanding debt within a specified period of time. It highlights your ability to repay loans and bills on time based on your payment history.

Credit Insurance
The term covers both trade credit insurance and credit life insurance. Credit life insurance is usually bought by the customer and it will pay back outstanding debt in the event of death or disability. Trade credit insurance can be bought to protect the customer from bad debt and defaulted payments.

Credit Limit
It is the total amount of debt a customer can accumulate on their credit card account.

Credit Rating
A numerical representation of the customer's ability to repay debt. The credit rating is calculated by credit bureaus and sold to prospective credit lenders.

Credit Report
A report compiled by credit bureaus detailing a customer's credit history. It contains information relating to current and past debts, the customer's payment history, judgements and all credit inquiries made with regards to the customer.

Credit Scoring
A three digit score calculated by credit bureaus using a statistical analysis of the customer's credit history. It denotes their credit worthiness.

Debit Card
A customer's payment card which is linked to their current account. It can be used to withdraw money from ATM's or at point-of-sale registers for purchases. There is no credit associated with the card and the customer must have sufficient funds within their current account to pay for purchases using the debit card.

EFTPOS
Electronic Funds Transfer at Point of Sale (EFTPOS) is the electronic system used in Australia and New Zealand for processing all credit card, debit card and charge card transactions. It also enables customers to withdraw money from a merchant's point-of-sale machine when they purchase products.

Frequent Flyer Points
Frequent flyer schemes enable customers to accumulate points which can be used to pay for airline flights; or other products and services associated with the scheme. Many credit card providers enable customers to collect frequent flyer points when they purchase products or services using their credit cards.

Interest
The interest on a credit card is the fee charged for using money the person doesn't own. Interest will also be paid to a customer from the credit card company when they repay more money than they owe.

Interest Rate
The annual percentage rate that a customer is liable for when borrowing money using a credit card or a loan.

Intro APR (typically 0% on purchases)
A temporary lower APR rate which is charged for a set period of time when a customer opens a new credit card account. A 0% APR rate on purchases means that interest will not be charged on new purchases for the duration on the specified period.

Intro APR Period
This is the set period for which the lower introductory APR is applicable. It is usually applicable for the first 55 days after opening the credit card account in Australia. Most are interest free which means that no interest is charged on all new purchases made in the first 55 days.

Issuer
The issuer is the bank; financial institution or credit union that provides the customer with the credit or debit card account.

Late Payment
Repayment of a debt which is only received or cleared after the due date specified on the invoice or bill.

Line of Credit
It is an open ended revolving loan which is accessed by special checks instead of a credit card.

Linked Account
Refers to any account, other than the card account, which is linked to the card. For instance a current account and a saving account may be linked to a single bank card.

MasterCard
A global bank card payments network which provides banks and other financial institutions with several products and services like credit cards. MasterCards can be used by customers to withdraw money and purchase products and services in most countries using the local ATMs and Point-of-Sale machines.

Minimum Payment
The lowest amount of money you can repay against your credit card balance each month.

Overdraft
It is the resultant negative balance which occurs when a customer withdraws more money than is available from their bank account.

PIN
Personal Identification Number (PIN) is a unique number associated with a debit card or credit card. A customer will enter this number when using the cards at an ATM or paying for products using a point-of-sales machine to ensure that the card is being used by the authorised card holder.

Principal
The original amount of debt or investment on which the interest is calculated.

Purchase Cover
Credit card providers offer varying levels of purchase cover which aims to protect customers when they use their credit cards to purchase goods or services. The insurance provides protection against theft; loss or damage.

Regular APR
The regular APR takes affect once the introductory APR rate period expires. It is the standard annual interest charged on all purchases made after the introductory period.

Rewards Program
A rewards program offers different incentives for customers using the associated credit card. Points are accumulated whenever the customer uses the credit card. These points can be redeemed for air miles, or to purchase products and services for various merchants which are offered as part of the rewards program.

Secured Debt
Debt which is backed by collateral which is used to reduce the risk associated with loaning large sums of money. For instance a person's house can be used as collateral against a loan. If the person defaults on the loan, the house can be seized, sold and the proceeds used to recover the outstanding debt.

Transaction Date
The transaction date is the date on which the actual purchase or account transaction took place.

Unsecured Debt
Debt which is not backed by collateral in the form of lien on specified assets. If the borrower defaults on payments or becomes bankrupt, the creditor will be able to make a claim on the borrower's assets but will only be compensated after secured debts have been repaid.

Variable Interest Rate
Also referred to as a floating rate, a variable interest rate fluctuates as interest rates and economic indicators change.

Visa
A leading US payment brand, it offers a global secure payment network to financial institutions and merchants. Banks, credit unions and building societies provide their customers with Visa credit or debit cards which can be used around the globe to purchase goods and services from merchants who are part of the Visa network.