Balance Transfer
This is when you move an outstanding balance from one card onto another. If a card has a Balance Transfer Introductory Rate it relates to the interest that is applied to the transferred balance and the duration the introductory rate is applied for. So for example a 0% balance transfer introductory rate for 12 months will mean that no interest will be added to your account for the balance transferred for 12 months from the date the account is opened. To qualify for the introductory rate you will need to transfer your balance within a set period from the account opening, this time limit varies by issuer. When the intro rate ends then you will be charged interest at the cards annual percentage rate (APR). The introductory rate period duration will vary by provider with the leading rates often reserved for those with excellent credit profiles.
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.
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 Card Issuer
This is the company who processes payments made with the card. The three main issuers are Mastercard, VISA and American Express.
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 balance 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.
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.
