Glossary of key terms for credit cards
Cash Advances
You obtain a cash advance by using your card to draw cash. Cash advances will invariably attract interest from the moment they are made, so there is no 'interest free' grace period, and the rate of interest for this facility could be higher than the card provider’s standard rate on regular purchases.
Cash Advance Fee
You will also be charged for using your card to draw cash. The charge might be made as a flat-rate fee on each withdrawal or taken as a percentage of the amount of cash advanced.
Credit Limit
This is the maximum amount that your credit card company will allow as credit i.e. a limit that cannot be exceeded as the balance owing on your credit card. You can calculate your available credit by subtracting your outstanding balance from your credit limit.
Purchases
This is where you pay for goods or services using your card– it doesn’t include things like cash withdrawals, cash advances or money transfers.
Purchase Introductory Rate
This relates to the interest that is applied to any purchases made and the duration that the introductory rate is applied for. So, for example, a 0% purchase introductory rate for 12 months will mean that no interest will be added to your account for any purchases made for 12 months from the date the account is opened. When the introductory rate ends then you will be charged interest at the card's annual percentage rate (APR).
To ensure you maintain any introductory rates applied to your account you must manage the account in line with the issuer’s terms and conditions. Specifically, that means that you must always make at least the minimum payment on time each month, and must remain within your set credit limit.
Withdrawal Limit
This relates to cash advances and is the maximum you can withdraw, either at a cash machine or over the counter at a bank, in any single day.
