Terms Explained

Annual Fees. Some card issuers may charge you a yearly fee in addition to the interest that accumulates when you make purchases.

Annual Percentage Rate. The APR is a measure of the cost of credit, expressed as a yearly rate. It also must be disclosed before you become obligated on the account and on your account statements. The annual percent rate of interest on your credit card tells you how much interest you will pay on outstanding balances on your credit card.

Balance. The amount of money you owe the card issuer, and includes purchases, fees, interest and transaction charges.

Balance Transfer Rates. If you have an outstanding balance on other credit cards and you want to transfer this to your new credit card, some credit cards offer reduced rates on initial or all transfers.

Cash Advance. You can use your card at a bank or cash machine to get a cash loan. The interest rate for a cash advance is typically higher than it is for purchases, and there is usually no grace period. There can also be a handling fee for withdrawing cash in addition to the interest charges, which can raise the cost significantly.

Credit Referencing. This is a record of your credit history which is usually used to help creditors judge your credit worthiness. It shows whether you pay your bills on time, how much debt you have, etc. Your report is compiled by credit referencing agencies and is released to lenders. It is important to check your credit reports regularly to catch possible human errors and prevent credit frauds.

Credit Limit. The maximum amount you may charge on a credit card. From time to time your card issuer may increase or decrease your credit limit.

Introductory APR. A temporary interest rate (expressed as a yearly rate) offered by card issuers to "introduce" you to their services. It will usually expire after a certain amount of time (usually 6 months).

Minimum Payment. The minimum amount you are required to pay the credit card issuer each month.