Credit Card Terminology – How Much Do You Know?
We all have credit cards but how much do we actually know about how they work. Does your mind go blank when different phrases are used when we are talking credit cards?
These are just a few pointers and meanings of credit card terminologies.
Additional Cardholder
You can have an additional cardholder on your account. A credit card can be issued to anyone of your choice if you ask.
APR – Annual Percentage Rate
This is how much it will cost you to have credit and is set as a yearly rate.
Balance Transfer
A balance transfer is where you move an outstanding balance form one card to another. Many companies offer 0% balance transfers for a minimal fee for a limited time so could be beneficial to you if you want to minimize your debt quicker as you would not be paying interest on your transferred balance in that time.
Cash Advance Fee
When using your credit card to obtain cash from an ATM you will be charged a fee. There are two ways in which you may be charged; either you will be charged per withdrawal or charge a percentage of the amount withdrawn.
Cash Back
Cash back is used as an incentive for consumers where they are rewarded cash back, whether it is at the end of the month or yearly, for using their credit card. A percentage of the money spent using your credit card is paid back to you.
Credit History
Your credit history is collated throughout your adult life. It reflects your borrowing and your payments. Do you pay your creditors on time, how much do you owe. Your credit history can influence credit card issuers to whether you are accepted or not for a credit card.
Credit Limit
Your credit limit is the amount of money available for you to use. Your credit card issuer will set the amount available and can increase the amount depending on how you use your card, you can also ask for your credit limit to be increased.
Default
To default basically means that you have missed a payment to your credit card company. If you default on any of your repayments you may be penalized for this by being charged a higher interest rate.
Handling Fee
Additional charges can be added for handling balance transfers, cheque and cash transactions. The handling fee will be included on your monthly bill.
Minimum payment
The minimum payment is the minimum amount of money you are able to pay your credit card issuer. You may wish to pay more than the minimum amount but paying less than the minimum amount or not paying at all can lead your account to go into default. The average minimum payment is around 2% of your outstanding balance.
PIN – Personal Identification Number
Your PIN is normally a four digit number that should be known only by you. You will be asked to type in your PIN number at ATM’s and when completing a transaction. You can change your PIN at most ATMs if you desire to do so.
These are only a few, but probably the most common, of the terms used when we are talking about credit cards. If you are unsure about any words or phrases used when getting a credit card don’t be afraid to ask what it means as the more informed you are the better choice you can make when selecting the best credit card for you.
