Adverse credit
Adverse credit is the term used to describe people who have struggled with credit in the past. If you have previous CCJ's, loan arrears or have been declared bankrupt then you may have adverse credit.
Balance Transfer
This is when you move an outstanding balance from one card onto another. Credit building cards don't usually have an interest-free introductory period so you'll be charged interest as soon as you make the transfer.
Balance Transfer Fee
Sometimes also called a Balance Transfer Handling Fee. This is a charge that is applied if you do move a balance onto your new card. It is usually calculated as a percentage of the balance you wish to transfer, typically it is around 3%. So for example transferring a £2,000 balance onto your new card with a balance transfer handling fee of 3% will incur a charge of £60, this is added to the balance on the card.
Cash Advance
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. It's important to keep an eye on this limit and ensure you never exceed it- if you do then your payment will be refused and you'll have to pay additional charges. You can calculate your available balance by subtracting your outstanding balance from your credit limit.
Credit Rating
This is a score that credit card companies assign to each customer to decide whether to extend credit to them and, if so, how much. A good credit score means that better credit card deals will be available to you, from longer interest-free introductory periods to more exclusive cards.
Minimum Payment
This is the minimum amount you need to pay off your card each month in order to keep within the terms of your agreement. You can either make this payment manually or can set up a direct debit from your current account to ensure you don't miss any payment. It's important to remember that paying only the minimum payment each month means it will take you longer and cost you more to clear your balance.
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. Very few credit building cards offer an interest-free introductory period on purchases, but if they do it means that no interest will be added to your account for any purchases made for the length of the introductory period 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.
Representative APR
APR stands for Annual Percentage Rate and is the effective rate of interest, over the year, which reflects all the costs of the credit, including interest charges and other fees (such as an initial arrangement fee and any annual charge). It is 'representative' as 51% of those accepted for the card have to be offered the advertised APR.
Representative Example
New regulations that came into force on the 1st February 2011 now mean that every credit account advertisement has to include a representative example of the total cost of the credit. The example includes all the required 'standard information', such as the representative APR, an example credit limit and the rate of interest on purchases after any introductory period has expired.
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.
