Credit Card Glossary

Affinity

These are that are affiliated to such things as charities, sports clubs and other organisations. This credit card will donate a percentage of every pound spent by you, towards the charity or organisation that is attached to the credit card that you have chosen and many will give a one off payment, when you first buy into the card, as well as a percentage of your spending.

Annual Equivalent Rate

This is really handy when you want to work out the benefits of different savings and investment propositions. It will show you what to expect in interest, when compounded yearly.

Annual Fee

This is a fee that is charged to you for using the services of your credit card, or can be charged to let your credit card issuer reduce the APR, that goes with the money you are borrowing. Most credit card issuers have now cut this fee from practice, to entice custom to they’re cards.

Applied Interest Rate

This will come into play, when credit card companies will assess the credit risk of each applicant and adjust the APR to each individual’s personal circumstances. Which means the higher the risk, the higher the APR.

APR

Annual Percentage Rate. Any organisation that is in the business of lending money or giving credit to customers, which has to be stated by law by the seller to the customer. This can be used in introductory offers by credit card or loan companies to make the face value of what you are buying into seem more appealing, but the typical APR will be set in brackets further down the agreement. This will be the compound rate of interest that you will pay once the introductory offer is over. This is what you should really be looking for to compare with other sellers of or loans before you commit to them, always look beyond the carrot that the lender only wants you to see.

ATM

Automated Telling Machine. Otherwise known as a cash machine or hole in the wall. These were brought about to free up queues in banks and to let people to withdraw money any time of the day. As well as your bankcards, credit and debit cards can also be used in them, though they may inflict a small painful charge when using them.

Balance

You will find this on your statement at the end of each month, this will be the monies still owed by you, to the credit card company, until it has been cleared in full.

Balance Transfer

This is where you decide to move your debt from your current credit card to one that has a balance transfer facility. You may be doing this to take advantage of a special introductory rate being offered or to one that is giving you a lower rate, for the life of the card. This will be done with the sole purpose to save you cash in the long run, as we all know how costly a credit card can be.

Cash Advance

This is a service that allows you to use your credit or debit card to withdraw cash from an ATM. This may be a handy way to use your card to obtain cash, but usually come with a bit of a sting, in the shape of a handling charge and a higher interest rate being attributed to it. So if it can be avoided, using your card to withdraw cash will save you extra expense, as it will be better to use your credit/debit card to make your purchases.

Cash Back

A credit card company may have this as a little perk to entice you to buy into one of they’re. It works by giving you back a percentage of the money that you spend on the credit card. It will not be of a large of a proportion, usually 0.5%-1%, some cards may go as high as 2% though only for a limited space of time.

CCJ- (County Court Judgement)

If you are in receipt of one of these, you will have not much, hope in trying to obtain credit from any source. It is a blot on your character in the regards of an unpaid debt and until that debt is paid in full, the CCJ will not be set aside from the courts records, until that time when the shortfall is paid.

Charge Cards

A card that works somewhat in the same way as a credit or debit card, though it has some fundamental differences to your run of the mill plastic. Your bank will normally distribute a charge card in place of your credit/debit card; this card will almost always come with a higher spending power and in some cases an unlimited one (keep it away from the wife). Though the other big difference with the charge card is that any purchases made on it, will have to be cleared at the end of each month.

Charity Cards

This is just another way of saying an Affinity card, where when you apply for a credit card that has a charity attached to it. That you my have bought into because of a wish to support the charity, the credit card issuer will most likely pay an initial donation to said charity (£15-£20) and will then pay back a percentage of the money that you spend on purchases back into the charity, usually in the region of 0.5%-2%.

Chip and Pin

A new system, that has been brought in to try and stem the wave of credit card fraud. The “Chip” will hold all the relevant information to make purchases with your credit card and the “Pin”(Personal Identification Number) is a four-digit number, which will release that information when you punch it into the number pad, to buy the goods. This will mean that only you will have the knowledge of the “Pin”, so there is less chance of anybody stealing from your credit card as there was from the old signature system, where simply being able to copy a signature, was all a crook had to do to get their hands on your money.

Credit Card

A little rectangular piece of plastic that will let you buy goods and pay at a later date. When you apply for a credit card, banks somewhere along the line own most, even though they may have a different name attached to them. They will also display a Visa or MasterCard logo on them; this doesn’t mean they are the owners of your credit card or that they borrow you the money that you are using, they are just a credit card network who the banks get to help them keep track of all of the payments and processing required to keep it all running smoothly. Most will let you spend they’re cash with an interest free period of up-to 56 days, where after interest will be added if the bill is not cleared in full. It gives you a lot of spending freedom and can be used in most countries across the world. Annual fees are very rare these days, but you may find that some still charge them. A down side to a credit card is that it can be quite an expensive commodity, so picking one with the lowest interest rate possible is a must.

Credit Card Protection

This is Insurance for your credit card, in the case that you may loose them or have them stolen and will protect you from any fraud being committed in your name. It can also offer you protection on any other cards or personal documents that you have, such as a Passport or Driving Licence.

Credit Check and Eligibility

Is all part of the process of applying for a credit card. It is a cross check done by the credit card issuer, to see if you will be a suitable customer for them and wont be of any credit risk. So they will check with the credit agencies to get a history of your credit. Ultimately if you are refused the credit card that you have applied for, you can ask the credit card issuer which credit agency that they used and ask the agency for a rundown of your credit history. The credit card company is not obliged to give any reasons why they have turned you down. But could be any number of reasons including, Mortgage arrears, CCJ’s, past failed credit applications and bad payments on past debts.

Credit Limit

Exactly what it means. This will be the amount of credit that your card issuer has allowed you. They will set this when you first apply for a credit card and will be reviewed every now and then depending on the perceived risk that you are. If you are a regular spender and pay on time, the chances are your credit limit will be raised. Though the initial credit limit will be set when the credit card issuer has done all the necessary checks on you with the credit agency’s. Remember to always try to stay within the credit limit that has been set by the credit card company, as the indignation of your credit card being refused, may cause you slight embarrassment. Though the thought of the credit card transaction being accepted, putting you over your spend limit, will subsequently lead to penalties and fees being induced by the credit card company. Asking for your limit to be raised would be a good idea if you feel that you may risk going over your credit limit, though you should always be prepared to the chances of being refused.

Credit Reference Agency

Collects all the credit history on you and keeps it on file. This is done to ever adult in Britain, who has applied for debt. This information can be obtained in a number of ways, these will be through any debt that you held in the past and will hold any details of problems regarding late payments or if you have not paid off the full amount of what was due, Which could ultimately lead to any county court judgements (CCJ) and any bankruptcy, which are held on record for 6 years. The Electoral role is another source, this will prove who you are and all who stays in the household and again be checked to see if there is any debt held against the address. Another is previous failure to obtain credit, which can lower your chances of being accepted again. Your credit card issuer will ask the agency to supply them this information, (the two main ones being Experian and Equifax) before making a final decision on your application.

Credit Scoring

This will be done by taking into account whether you will be able to repay the cash that you are applying to borrow from the credit card issuer. The lenders will use a system that is devised on the answers on your application and will then decide if you will be a customer of there’s or not. A score will be given to each individual answer of the questions that the application form has asked you and if the total score exceeds the minimum score set by the credit card company and will more than likely be accepted. They will show favour to homeowners and applicants with a steady and reliable income, who will be less of a risk of not keeping up with their payments.

Credit Search

This is where the credit card company will apply to a Credit Reference Agency (see above), to find out if you are the right customer for them to have, by going to the agency and finding out if you have any skeletons in your cupboard, regarding county court judgements, late payments, non-payment or bankruptcy on any debt held in your name.

Debit Card

Or Switch card is a card that when used the amount of the transaction is taken directly from your bank account, though you will have to have the necessary funds in your account to complete the purchase. Some debit cards have an overdraft facility to cover you for this, but what all debit cards won’t let you do, is to use it to borrow money.

Debt Consolidation

This is where you will apply for a personal loan or a credit card loan, to pay off all your existing debt with one easy payment at the end of each month. This will offer you a time limit where you will know when the debt that is due, is going to be paid in full and wont accrue the interest on top of interest, that a credit card will add each month. It will also mean that you are only dealing with the one lender, leaving you less chance of missing a payment and having fees applied, if you are trying to keep account of 4 or 5 different lenders.

Donation Rate

Applies to Affinity. This is where the credit card issuer will pay a fixed or percentage of any purchases you make while using the Affinity card, to the named charity or organisation, which is associated with the credit card issuer.

Equifax

is one of the main Credit Reference Agency’s. Who will supply credit card companies, the necessary information on people who are applying for, it will hold the credit history of every adult man and woman in the U.K. If you have been refused credit, you can apply to them to send out a copy of your credit report.
http://www.equifax.co.uk/

Experian

(As above) http://www.uk.experian.com/

Fixed Monthly Payments

This is set by the credit card company and is the minimum payment that must be made at the end of each month. Minimum payment will usually be set at 2% of the total amount owed, or £5 whichever is greater. Paying more than the Fixed amount set by the credit card issuer, will be the best plan of action, as are not the most financially viable ways of borrowing and by sticking to minimum payments, you will only succeed in paying interest on top of interest.

Fixed Rate

An interest rate that fixed when you first but into a credit card or loan and does not change for the history of the debt, unlike a variable rate, that can change with the financial climate at the time.

Go To Rate

Given it’s other name of “standard APR”, this is the rate that you will eventually pay, when you have bought into a credit card that was offering you a special introductory rate at the beginning, to entice you into buying the credit card. Thus reverting to a higher rate once your 6-12 month period is over.

Gold Card

Once the fashion statement of, the gold card was the card for the more affluent among us. The gold card also came with a range of added extras such as Insurance, better credit limits, a preferable interest rate and incentives that included travel miles and discounts.

Grace Period

A period of time that most credit card companies will give to you before they start to add interest to your purchases, usually can be up to 56 days from point of purchase, giving time to pay off the balance!

Hard Sell

The only thing that could be put into (H), due to the fact everywhere that you turn or look, you either have someone in your face trying to get you to buy they’re, the leaflets are falling from your daily newspapers or your mail includes two or three credit card issuers guaranteeing you, they’re.

Initial Donation

A donation that is given to the charity or organisation that is linked to the Affinity credit card you have acquired. This will usually be £15-£25 depending on how generous your credit card issuer is. The donation will be made for every new credit card that is taken out, a sort of welcome to the club sort of thing, with the charity being the recipient of the good fortune on your behalf.

Interest

Speaks for it’s self really, the charge made to you by the lender for using they’re cash.

Interest / Repayment

No interest will be charged if you keep your credit card balance clear at the end of each month, though on the other hand if you don’t then the interest rate attributed to your credit card will then take effect.

Interest Free Period

0% interest free periods, are being offered by credit card companies right now, for up to 12 months by some, for balance transfers that allows you to save a years interest payments, giving you a better chance of paying your debt that little bit quicker. Though some will add interest to any purchases made on the card, which will mean you will pay interest from the point of purchase, as there will be no grace period. That is the interest free period you get with most cards these days, which is usually in the region of 56 days. Watch out for cash withdrawals and cheques, as those will attract interest straight away.

International Rates

Credit cards are ideal to be used all over the world, giving you the freedom of spending, you might not have with cash, as you will always be worried that you might run out. Though there is a sting that comes with using your credit card abroad, in it comes in the form of a charge that can come close to 3% for every transaction. This is made, we are told to cover the cost of the change of currency and handling.

Introductory Rate

APR- The big bold figure you will find at the top of a leaflet or advertisement to entice you to go for that company’s credit card, this can be as little as 0% for the fixed period of the promotion, though it will jump to as much as almost 20%, when the deal is over, so take care and read into what you are buying.

Jaw Drops

This is what happens when you realise how much you have over-spent on the plastic.

Keep It Clear

The best way to deal with your credit card statement.

Late Payment Fee

Can usually be between £15-£25 if you fail to pay your credit card bill on time, some credit card issuers will give you a months free grace, but do not take that as read, make sure that the small print on your agreement is read thoroughly, or you could be in for a nasty shock.

Legacy Rate

Will usually be seen as a loyalty bonus, where your credit card company will reward you with a legacy APR, which is a lower interest rate given to you as recognition for your continued support.

Loyalty Scheme

Is hoped by the credit card company to induce more spending by the customer. With such incentives as receiving points for every pound spent by the customer, which can then be cashed in for gifts, Air Miles and so on. But it will depend on the credit card that you own, as many have they’re own rewards.

MasterCard

A credit card management organisation, that credit card companies look too, for too oversee the payments systems and will let the credit card to be accepted all over the world. You will not receive the money that you borrow from your credit card from MasterCard; this will come from the card issuer.

Minimum Payment

This is the amount that is set by the credit card issuer, that they expect to be the least amount paid back to your account, without you receiving any penalty fees. Most credit card companies have it set at 2% of the total balance outstanding or £5, which ever is greater. Though you are not bound to pay the balance owed off in full at the end of each month, the minimum payment must be met.

New shoes

This is what most women purchase with their.

Oh! Lord

Just seen the price of those shoes.

(Personal Identification Number) A four digit number that you punch into a keypad on a ATM to release cash from your account and more recently introduced into, with the Chip and Pin system.

Payment Protection Insurance

Will cover you in the event of you having an accident, illness or loosing your job through redundancy, leaving you unable to pay your credit card bills. Some stipulations may apply, so always read the small print.

Platinum card

This is a credit card that is aimed at customers who are at the higher end of the income market. They will usually come with a lot of added extras such as better interest rates, insurances, and incentives and above all, higher spending limits.

Quid’s in

What you may be if you take out a credit card, with a 0% deal on balance transfers and purchases.

Rates and Fees

These are charges made to us by the credit card issuers. Charges can come in the shape of APR (Annual Percentage Rate) this is interest you will pay if you don’t have a clear balance at the end of each month.
Annual Fees can also be charged; this is a fee that is rather like a yearly membership, though most credit card issuers have fazed them out.
Withdrawing cash from an ATM with your credit card, can also come in for a charge.

Standard APR

This is level of interest that you will ultimately pay once any introductory period on your credit card ends. When applying for a new credit card, always make sure that the Standard APR is stated, so that you know what you have to pay, once the initial interest period is over.

Store cards

A card that is offered to you by high street stores, giving you a credit limit to spend within the store or any store that is affiliated to the store card. To attract you to a store card, they will offer you a discount on the purchases you are about to make, if you take one out, with the chances of discounts off products at other times.
But be wary of store cards as they are usually in the higher realms of interest and are more expensive to run than a credit card.

Travel Insurance

This is an incentive, which will be offered to owners of Gold or Platinum and will either be free or cheap and is added for people to be enticed into taking one of those out. Though as always the small print should be read, to make sure that it will offer you the cover that you need.

Types of card

Affinity cards: are a credit card that are attached to certain charities or organisations and will donate a percentage of the cash that you spend with your credit card, which is usually between 0.5%-2%, with some cards paying a one off donation straight to the charity or organisation, to entice you to buy into the card.

Cash Cards: are your everyday bankcards, which are issued by your bank or building society and will be used to withdraw cash from, an ATM (cash machine), by putting in your four digits Pin that will release cash from your account. Some cash cards can also be incorporated with credit or debit cards.

Debit cards: work in the same way as a credit card, but with one main difference being when you use your debit card, the cash is taken almost straight from your account and you have to have the funds already placed in the bank, with the advantage being that you can only spend what you have, giving you a little more control of your finances.

Gold and Platinum cards: that are aimed at people who have a higher income and usually come loaded with extra benefits.

Loyalty cards: a credit card where the issuer of the card, offers up incentives such as Air miles, cash back and discounts. The issuers of these will usually be part of the firms involved with the incentives that are on offer.

MasterCard: an international payment and services organisation, whom look after the credit card dealings of over 15,000 financial members.

Switch card: a card where you pay for your goods and the cash comes straight from your bank or building society account, through being linked to a UK switch network.

Visa: Works the same way as MasterCard, though they have a larger financial members base of over 21,000.

Up to your eyes in debt

This is what will happen if you don’t keep up with your repayments on your.

Variable APR

is an interest rate that is based, on the current financial climate.

Visa

Watch your

never take your eyes off your credit card when you hand it over, as it can be easily “Skimmed” under the counter and then used to make a copy of your credit card.

X-pensive

What and store cards can be, if they are abused.

Years of debt

This s what you will have if you only keep to paying the minimum repayments set by the credit card issuer.

ZZZZZzzzzzzzzzzzzzzzzz!