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Credit cards glossary

Annual fee

A payment you may be asked to make every year in return for your credit card account. Not all accounts charge an annual fee.


The annual percentage rate (APR) represents the cost of credit and takes account of the rate of interest and any charges. The advertised APR must be calculated the same way by all credit providers so customers can use it to compare cards across the market.

For more information on APR’s and what to look for see credit cards explained [PDF, 843 KB] opens in new window.

Balance transfer

A balance transfer is where a debt owed on one credit card is transferred to another one.

You’ll find more details including the circumstances in which when you might want to make a balance transfer in our guide.

Balance transfer fee

A one-off payment you may be asked to make if you choose to transfer a balance from one credit card account to another. It’s usually a percentage of the amount transferred.

Not all cards will charge a balance transfer fee and some may offer to refund it in some other way. For example, some issuers offer a fee refund in cash or loyalty points. 

0% balance transfer

This might refer to a card which offers a 0% interest rate on balance transfers for a specific amount of time.

Cash advance

This generally refers to withdrawing cash from an ATM but making a mortgage or loan repayment, buying foreign currency and transferring money from your credit card account to another bank account can also be included in the definition.

Card issuer

Also known as the card provider. The bank or building society who provide your credit card account.

Chip and PIN

A security measure used to protect your card if it is lost or stolen. Your PIN (personal identification number) is the four digit number you’ll be asked to enter into the electronic card machine when using your card to pay for item in-store.

Consumer Credit Act (CCA)

The 1974 Act gives consumers rights and protections when borrowing money. It requires lenders to be authorised and regulated by the Financial Conduct Authority and comply with a set of standards.

Credit card calculator

A tool which takes the interest rate into account in order to help you calculate the length of time required to pay off a credit card debt.

Credit limit

The maximum amount of money you can charge to your credit card in a certain period. For example, your card may allow you to borrow up to a maximum of £3,000.

Credit rating or credit score

Your credit score reflects how ‘creditworthy’ you are believed to be and is used by lenders to determine your application for credit as well as the rate you’re offered.

Find out more about what makes up your credit score and how to improve it [PDF, 322 KB] opens in new window.

Credit history

A record of your previous borrowing behaviour including the number and type of credit accounts opened, amounts borrowed and owed, late payments and any bankruptcies.

Adverse credit refers to someone who has a poor credit history and is likely to have a low credit score.

Credit check

When you apply for credit, lenders will carry out a check of your credit history.


A debit is a payment made towards clearing your credit balance.

Fixed payments

Where you choose to pay the same amount of money towards clearing your credit card balance each month.

Foreign transaction fee

An additional charge you may incur when you use your credit card abroad.


A charge you’ll pay the lender in return for borrowing money. This will be paid on top of your repayments and is calculated as a percentage of your outstanding balance.

Introductory rate

A lower interest rate which you may be offered when you first open a credit card account. After a certain amount of time the introductory rate will expire and the rate will likely increase to a standard rate.

Minimum payment

The lowest amount you must repay each month. This may be a particular sum, such as £5, or it might be a percentage of your balance.

You will sometimes see lenders stipulate that you make the minimum payment in order to continue to qualify for an introductory or promotional rate.

Money transfers

A money transfer lets you transfer some of the available credit from your credit card to your current account.

Money Transfer Fee

A one-off payment you may be asked to make if you choose to transfer money from your credit card account to your current account. It's usually a percentage of the amount transferred.

Promotional rate

A lower rate of interest which may be offered when you first open your account. It might even be a 0% interest rate. This will likely expire after a specific period of time and you’ll see the rate increase to a more standard rate.

Purchase rate

The interest rate you’ll pay when you use your card to make purchases and choose not to pay off the balance in full.

Reward credit cards

Some cards will give you access to a reward or loyalty scheme. For example, some Sainsbury’s credit cards reward you with Nectar points when you use it to pay for goods and services.

Unsecured lending / borrowing

A debt which is not secured against the borrower’s property. If you default on an unsecured debt the ownership of any property you own does not pass to the lender.