Credit cards can seem pretty straightforward but no two are exactly the same. We’ve compiled a short glossary of terms you’re likely to come across when selecting your credit card.
- Annual Percentage Rate
- Balance
- Balance Transfer
- Chip & PIN
- Credit Agreement
- Credit Limit
- Credit Record
- Credit Reference Agency
- Credit Score
- Direct Debit
- Identity theft
- Interest
- Interest Rates
- Interest Free Period
- Introductory Rate
- Late Payment Fee
- Minimum Repayment
- Outstanding Balance
- Over Limit Fee
- Payment Due Date
- Posting Date
- Responsible Borrowing
- Responsible Lending
- Statement
- Statement Date
- Transaction Date
- Variable Rate
- Annual Percentage Rate (APR)
The APR is a measure of the cost of credit expressed as a yearly rate. This is the interest rate, including any membership fees, which will be applied to any purchases if you do not repay your monthly balance in full. Although not a true reflection of the amount of interest you will pay – as different things you can do with your credit card are charged a varying interest rates – the APR is a good way to compare different credit cards.
- Balance
The amount of credit you have used up at any given date.
- Balance Transfer
The act of transferring credit from an existing credit card account to a new one – often at low introductory interest rates.
- Cash Advance
A cash withdrawal at an ATM or bank. This is an instant cash advance facility from your credit card account. The credit card company will apply interest charges from the day you take the advance to the day you pay it off. Interest rates on cash withdrawals are typically higher than for standard purchases and a transaction fee may also be charged based on the amount of your withdrawal.
- Chip and PIN
Chip & PIN is part of an initiative across Europe to cut the rising tide of payment card fraud. This new, safer card payment method uses Chip technology and involves entering your PIN, just as you would at a cash machine, into a keypad instead of signing a till receipt whenever you pay in person in shops, restaurants and pubs etc. This means it's more important than ever to remember your PIN.
- Credit Agreement
An agreement a borrower makes to receive an amount now and repay it in the future.
- Credit Limit
The maximum amount of credit that a credit card company will allow you to borrow on that credit card.
- Credit Record
This is a record of all the credit agreements you have had in the past and your ability to service and repay them. A credit file will also contain information from the Electoral Register, details of any County Court Judgements or Bankruptcies and your previous applications for credit, known as 'credit searches'.
- Credit Reference Agency
Credit reference agencies are licensed through the Office of Fair Trading, under the Consumer Credit Act 1974. They supply factual information to financial institutions to assist with lending decisions, to confirm address details and to help guard against fraud. They do not give an opinion on the financial status of a customer.
- Credit Score
The system used by most major banks, credit card and finance companies to decide whether to provide you with a card and to set your credit limit.
- Direct Debit
Payments made on a regular basis (for example, for your gas and electricity) taken directly from your account on an agreed date.
- Identity Theft
Identity theft is when someone steals the identity of an innocent victim to apply for mortgages, loans, credit cards, goods and services in their name.
- Interest
The cost of borrowing money from a lender. More practically, it is the amount you'll pay on any money you still owe after the interest-free period each month.
- Interest Rates
An interest rate is a way of expressing the interest to be paid over a specific time period, usually a year. This is always stated as a percentage of the amount borrowed.
- Interest Free Period
If you do not have an outstanding balance on your credit card, the interest free period is the maximum period of time you have to pay new balances before interest charges apply.
- Introductory Rate
A low but temporary rate on credit card purchases and/or balance transfers. Remember that when payments are made, they will normally go towards any balances with a low introductory rate first.
- Late Payment Fees
Late payment fees may be charged if you miss the payment due date which is given on your credit card statement.
- Minimum Repayment
Each month you must pay at least the minimum repayment by the due date, the minimum repayment is usually based on a given percentage of the total balance.
- Outstanding Balance
The balance that remains on your account at any time unless you have paid in full and made no further transactions.
- Over Limit Fee
Over limit fees may be charged when your balance goes over your credit limit, but there are no over limit fees on your Student Barclaycard.
- Payment Due Date
The date, as shown on your statement, by which at least the minimum payment must be received and cleared. This will usually be 25 days (Bank Holidays excepted) from the statement date.
- Posting Date
The date a purchase, cash advance or balance transfer is put on to your account.
- Responsible Borrowing
An approach to borrowing where you borrow no more than you can afford to repay and don’t intentionally amass unmanageable debt.
- Responsible Lending
An approach to lending that recognises the benefit of credit but doesn’t seek to burden borrowers with unmanageable debt. An approach based on transparency and openness.
- Statement
A monthly bill from your credit card provider summarises your account including the outstanding balance, new purchases, payments, credits, interest charges, other finance charges and other transactions for the month.
- Statement Date
The date your statement is produced (as opposed to the date you receive it).
- Transaction Date
The date you made your purchase, cash advance or balance transfer.
- Variable Rate
An interest rate which may change from time to time.
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