Credit card jargon buster – 10 top terms

Credit cardsEver wondered what some of the key credit card terms really mean? Here are our top ten.

  1. APR – The annual percentage rate is the price you pay each year for money you’ve borrowed, including interest and fees.  The representative APR is an advertised rate that a minimum percentage of customers will pay, usually 51% of those accepted.  If you’re not given the advertised rate, you’ll get a personal APR.
  2. Balance Transfer – This is when you choose to move credit card debt you already have to a lower or  0% interest credit card balance, usually for a transfer fee.  With a 0% balance transfer deal you can potentially give yourself longer to pay off an existing credit card debt, without having to pay interest. This is as long as you make the minimum monthly payment and stick to any other Ts and Cs. More about balance transfer cards here
  3. Cashback credit cards – With a cashback or reward credit card you can earn while you spend money on the card.  It can give money back on purchases or has incentives such as air miles. Cashback can come in varying amounts, typically in the form of credit on your card balance. More about cashback credit cards here
  4. Contactless payments – With these you can touch your debit or credit card on the terminal, or your smartphone or tablet, or even your watch or a keyfob. It’s a quick and simple way to pay for items of £30 and under. As of March 2016, on average each contactless transaction is for £8.40. No need for a PIN or a signature, all over in seconds.  More about contactless payments here
  5. Credit Card – A credit card lets you spend money on credit, up to a pre-set limit.  Paying it off in full every month often means you won’t have to pay interest – if you don’t, then interest will usually be charged unless you have a promotional offer. Making at least the minimum repayment is important, as missing one can negatively affect your credit score.  Applying for too many cards at once can hurt your credit score even more, so it’s an idea to choose a credit card you’re more likely to get, and one that suits your needs best.  More about credit cards here
  6. Credit limit – A credit limit is the maximum amount that a lender will let you borrow. For credit cards, the credit limit is the maximum amount you can have on the card, whether through purchases or existing balance. Although it’s set when you open your account, it’s not set in stone and can change depending on how well you manage the card.
  7. Credit Score – When you make an application for a loan, credit card, mortgage or other type of credit, lenders work out a credit score for you, based on factors such as: information on your credit report, information you’ve given on your application form, information they may already hold on you, public record information (such as CCJs), and their own lending policy, which may differ from other lenders.  The Experian Credit Score is a guide to help you understand how lenders may view you, based on the information on your Experian Credit Report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now. More about the FREE Experian Credit Score here
  8. Introductory Rates – These are low interest rates, often 0%, for a fixed period at the start of purchase or balance transfer deals, that may last between 3 months and, in some cases, as long as 40 months. As long as you make the minimum monthly repayments and stick to any other Ts and Cs, you won’t have to pay interest on the balance for the introductory period. But try to make sure you know when the introductory rate ends, so that you can clear the balance in full to avoid being moved on to what may be a high interest rate once it’s over.
  9. Minimum repayment – When you get your credit card bill, there will usually be a minimum amount you have to repay each month in order to avoid charges (besides interest) or default penalties. It’s important to pay this, if you can, even if you aren’t able to pay the full amount – as missed or late payments stay on your credit report for at least six years, and this can have a big impact on your credit score.
  10. Purchase cards – These are credit cards that allow you to spend on the card within a specified period, without having to pay interest on the balance while the promotional rate lasts. This is as long as you stick to its terms and conditions, such as making the minimum monthly payment.  Credit cards with 0% or low rates on purchases can help spread the cost of buying things big and small.

CreditMatcher
Now Experian can help you find credit cards and personal loans you’re more likely to be accepted for, and it won’t negatively impact your credit rating.  

Experian CreditMatcher is a free independent service that helps you compare credit deals, based on your credit information, and gives your Experian Credit Score FREE forever. With Experian CreditMatcher you can  check your chances of being approved by viewing your Eligibility Rating for relevant credit cards. We are a credit broker not a lender, working with selected lenders.  

You can compare credit cards with CreditMatcher HERE

†Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.

Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to.

CreditMatcher is provided by Experian Ltd (Registered number 653331). Experian Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 009743). Experian Ltd is registered in England and Wales with registered office at The Sir John Peace Building, Experian Way, NG2 Business Park, Nottingham, NG80 1ZZ.

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