Cardwise Glossary

Additional card – a credit card that is issued upon your request to an additional person, whom you have nominated, who then becomes another cardholder.

Advance – a transaction where you use your card in order to receive foreign currency, travellers' cheques or cash or perform a gambling transaction.

Advance limit - the maximum amount you are authorised to be indebted on your bank account at any time in the form of money transfers and advances.

Affinity card - a card from which the credit company will donate funds to a football club or charity organisation every time you make a transaction.

APR (Annual percentage rate) - the interest you will be charged on the amount you borrow on your card. The APR is an approximate figure intended to give you an idea of the cost of borrowing on your credit card. The commencement data and time allocated to pay the interest also affect the cost.

Annual fee - a fixed amount that you will be charged, which most credit card companies impose. The competition in this industry is fierce, however, and the majority have waived the yearly fee.

Bad credit - this describes a bad credit rating. Factors that will adversely affect your credit rating include exceeding card restrictions, skipping payments, tardy payments or declaring bankruptcy. You may be denied loans if you have bad credit

Balance transfer - a transaction in which the card issuer will repay your debt to another monetary institution and deduct the debt amount from your account.

Cash back – a reward scheme intended to encourage you to use your card more often. These schemes vary extensively from an insignificant 0.1% up to 2% on credit card purchases.

Charge card - a card that allows you to pay for goods up to a pre-determined sum and then pay the balance in full at the end of approved period, which is typically month end.

Commercial card – this is a general term that applies to any form of corporate, purchasing and business credit cards issued to consumers

Credit limit – this is the maximum amount that you will be permitted to borrow on your bank account at any given time.

Credit rating - a computer file that contains your personal financial information and a record of your previous dealings with financial institutions. Any loans you have made in the past will be detailed in your rating, and your payment details. This information is used to decide whether a company will lend to you.

Fixed rate – this is a credit card that charges a pre-determined flat interest rate instead of a variable one that will fluctuate according to the lender’s policy.

Introductory rate - a special offer that credit card companies use to lure new customers. It can be a few months when no interest or a low interest rate is charged, or zero interest charged on cash advances, amongst other options, after which the company’s usual rates are imposed.

Minimum payment – the least amount you are required to pay in a single month to fulfil your repayment contract with the card issuer. The minimum payment amount is normally worked out as 2 or 3% of the debit balance.

Variable rate - this is the interest you will pay on your credit card above a certain amount, if you fail to settle your balance before the grace period ends, and is normally the official base rate.

Withdrawal limit – this applies to cash advances, and is the most you are allowed to withdraw from your account, either in the bank or from a cash machine, in a 24-hour period.