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The Credit card industry comes with a lot of jargon. You can't be expected to recognise all the technical phrases employed and some of them could be very important. Listed below you will find a quick description of the most common credit card industry related terms and phrases. Affinity card A credit card that makes a donation to a charity of your choice based up on how much you spend. In most cases it's best to avoid a charity that encourages you to sign up for such a card. Chances are such a credit card has a higher interest rate than the standard. Don't let guilt cloud your judgement. APR (Annual Percentage Rate) calculated yearly this is your overall interest rate presented as a percentage of your credit card balance. ATM (Automated Teller Machine) A cash machine. Utilized to withdraw money direct from your credit card, although in general a fee will also be charged. Balance transfer When you transfer your debt 'balance' from one credit card to another. The usual reason for this is to try and keep as much debt as possible on a lower-interest card. Credit limit Your credit limit is the maximum amount you can spend or withdraw on your credit card. Spending beyond your credit limit will result in your card no longer being accepted, and you being charged an over-limit fee. Fixed rate A fixed rate credit card is one which indicates that you are given a fixed rate on sign up which should stay the same for the period you have the credit card. In practice though interest rates can be changed for almost any reason. Grace period The grace period is the amount of time between your spending with the credit card and the time when you start paying interest on that spending. The best credit cards can have a grace period of up to two months, poorer cards may not have one at all. Minimum payment The minimum payment is the lowest amount you can pay back to the credit card company each month. You always try to pay more although this is not necessary. Paying only the minimum amount you are not paying back the money borrowed but only the interest. Minimum payments are usually around 2% of your balance. Sub-prime A phrase used in the finance industry to describe customers who are a bad credit risk, but are considered worth lending to as the bad credit risk allows the finance company to charge higher fees. Teaser rate A 'special offer' low rate. You will see many offers with "LOW 4.9% APR" in the headline followed by "for first six months, 21.9% thereafter" in the small print. Teaser offers can sometimes be worth taking, but not if they tie you in for longer than the period of the offer. Variable rate An interest rate that is calculated by adding a figure to the current base rate. Taking this option will allow your credit card to be affected by changes in national interest rates - a good idea if you think they might go down, and a bad one if they're on the way up.
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