Credit card jargon can be confusing if you are not familiar with it. Here we take a look at the most common terms.
APR stands for Annual Percentage Rate and is the interest the credit card company will charge you over the whole year. It is useful to know this, so you can compare different offers, but also take note of any other benefits or charges that may occur.
Your credit limit defines the maximum amount you can have unpaid on your credit card. It will be set when you get a new account, but may also be changed at a later date.
Banks and finance companies assign a score to you based on your credit report, your previous relationship with the company and any information you give about yourself.
This is when you transfer money owed on a different card to your new card. The interest rate might be very low for their introductory period, but there may also be an admin fee.
Chip & Pin
This involves using a Personal Identification Number to authorise payments on your card, instead of the old method of using a signature.
If you go over your credit limit or fail to pay the minimum payment on time, you will be charged default charges, which not only cost you money but also give you a bad credit rating.
When you open a new credit card account, you may get a period of several months where you do not have to pay any interest. Also, each month, you will have a short interest-free period after you receive your monthly statement.
This is the total amount you owe the credit card company, and is made up of purchases plus balance transfers.
This is the minimum you must pay each month. Typically it can be £5 or 2.5% of the balance, whichever is the larger amount.
Purchase Delivery Protection
This covers you for damage or loss that may occur when buying goods that are delivered.
Cashback Credit Cards
Cashback credit cards give you a small amount of cash each time you make a purchase.
Contactless Payment Technology
For purchases that are £20 or less, some credit cards now allow you to quickly pay just by holding your card against the reader on the till. There is no need to enter your pin number, yet you are still covered against fraud.
This is when the credit card company monitors your account for any unusual activity which may indicate that your card has been stolen.
Sometimes you can be selected by the credit card company to apply for a card.
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