Credit Card Jargon

APR

  APR, or Annual Percentage Rate, is the measure used when quoting the interest rate on a card. It is calculated by taking into account any annual fee or other fixed cost as well as the actual interest rate charged. The lower the APR figure, the less you'll pay in interest.

Annual Fee

  Some cards charge an Annual Fee, or a fixed yearly amount you pay in order to use the card. This used to be a standard feature of all credit cards, but has recently become much less common.

Approval Rate

  All card issuers have their own criteria for deciding whether or not to approve your application. Credit rating, salary, age and many other factors are taken into account. Some cards have low approval rates, meaning they are very selective in whom to issue a card to. The higher the approval rate, the more likely your application is to be accepted.

Balance Transfer

  This is the process of clearing your debt on one card by paying it off with another. Many cards feature a low or zero per cent rate for new customers making a balance transfer, although this is almost always for a limited time.

Blended Rate

  The blended rate is often quoted in adverts for cards offering an introductory rate, and is calculated as the APR in the first year of card use, combining the introductory rate and the standard rate.

Cashback

  Some cards offer cashback - every time you spend using your card, a small percentage of that amount is credited back to your account. Cashback is effectively a discount on everything you buy using the card.

Credit Limit

  This is simply the amount you are allowed to borrow on your card, or the maximum balance you can build up.

Flexible Card

  Flexible cards are a relatively new style of card, where you can choose from a variety of interest rates, annual fees, cashback rates etc, to 'design' the best card for your personal needs. Most cards allow you to change the card's features a few times a year as your circumstances change.

Introductory Rate

  Many cards offer a low or 0% rate for new customers, often for the first six months, as an inducement for customers apply. In most cases, the introductory rate applies only to balance transfers, but it is becoming more common for it to apply to purchases too.

Risk Based Assessment

  Some cards use this system in order to grant applications from a wider range of people. Those with poorer credit ratings may still be offered a card, but often at a higher interest rate than the one advertised.

Standard Rate

  This is the usual interest rate of your card, which will apply after any introductory rate has ended.