Credit card terms explained

Credit card jargon doesn’t have to be confusing. Our glossary can help you understand some of the most commonly used credit card terms and abbreviations.

All-round credit card

This is a credit card with both a balance transfer and a purchase offer that last for the same or similar time. 

Annual Percentage Rate (APR)

The annual percentage rate is the rate you’ll be charged on your credit card balance over a full year. It takes into account the interest you pay, how often you make repayments and any other charges, such as processing fees. All credit card providers are legally required to show you an APR. This is so that you can compare different offers and decide which is best for you. 

Balance transfer

This means transferring money you owe on a credit or store card to another credit card. 

If you’re opening a new credit card account, the interest rate on your balance transfer could be as low as 0%. This means you have a period of time to pay off the amount without incurring any extra interest. If you haven’t paid off the balance transfer amount when the 0% period ends, you’ll have to pay interest on any remaining amount. This will be at the standard balance transfer rate.

Balance transfers might include a balance transfer fee, which we’ll always explain clearly to you.

Cashback credit card

A credit card that gives you a small percentage back on all eligible purchases you make on that card. The cashback is paid back to your credit card and will show on your statement each month. If you don’t clear your balance every month, the interest we charge will probably be more than the cashback you get.

Credit limit

A credit limit is the maximum balance that you can have on your credit card at any time. 

It can be made up of purchases, balance transfers, cash withdrawals and any fees and charges on your account. Your credit limit will be set when you open your account, but could change after that. The limit will depend on the type of card you’re applying for, your personal circumstances and your credit rating. 

If you go over your credit limit, there may be charges and you could damage your credit rating. 

Minimum repayment

It’s important to plan how you’ll repay any debt you build up on your credit card. You have to make a repayment each month if there’s a balance on your card. The smallest amount you can repay is called the minimum payment. We’ll tell you what this is on your statement, alongside the date that it’s due. 

You must keep paying the minimum repayment even if you’re in a 0% interest-free period. If you don’t make the minimum payment you’ll be charged a fee. 

You should try and repay more than the minimum payment each month if you can. Only repaying the minimum payment means it’ll take you longer and cost you more to repay your balance. This is because you’ll be charged interest on your balance each month. 

Direct Debits

One way to stay on top of your credit card repayments is to set up a Direct Debit. This means you’ll never miss a payment or incur a late payment charge. 

You can set up a Direct Debit to repay the minimum payment, a fixed amount or the full balance each month.

For more information on how to set up and manage a Direct Debit, please see our Direct Debits page. 

Credit check

When you apply for a credit card, it leaves a ‘footprint’ on your credit file. Your credit file is held by a credit reference agency (e.g. Experian, TransUnion, Equifax) and can be viewed by other banks and lenders. 

If you have multiple applications recorded on your credit file, this could affect your ability to get more credit, for example, if you need a loan or a mortgage. 

Missing payments can also have a negative impact on your credit file. It’s important you keep your account up to date.

Eligibility checker

We have an eligibility checker on our website that we recommend you use before applying for a new card. It’ll tell you how likely we are to accept your application and will even give you an indication of the credit limit you’ll get. It’s quick and easy to use and won’t leave a record on your credit file. 

To use our eligibility checker, please visit our credit cards page. Select the credit card you’re interested in, and use the checker.

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