UK Pet Insurance Centre

We have compiled a list of useful terms that you are likely to come across in your dealings with credit cards so that you know exactly what you are getting into.

• Additional cardholder - one credit card account can have more than one credit card issued on it. Additional cardholders are able to make use of the credit card account, but it will be the main cardholder who is responsible for bill payment.
• Annual fee - this is a yearly fee charged by some card issuers to cover the costs of service throughout that year.
• APR - stands for 'annual percentage rate' and is a figure representing both interest rates and any other additional charges such as service or arrangement fees. Credit card companies are legally obliged to reveal their annual percentage rate to the consumer.
• ATM - stands for 'automated teller machine', or, more colloquially, simply as cash machine. You can withdraw money from an ATM with your credit card, although you will need a PIN (personal identification number) in order to access your account.
• Cash advance - although credit cards are usually used for the straightforward purchase of goods, you can get a cash advance on your credit either by using an ATM or by going into a bank or building society. You will usually be charged a small fee for this service.
• Cashback - when you make purchases with a debit card such as a Switch or Solo then you can withdraw money from your current account at the same time by requesting cashback. You will receive cash along with your receipts for your transaction, and your bill will be totalled to included the cashback received.
• Credit card - a card which enables the cardholder to make transactions using a credit account. The cardholder is not usually obliged to pay off the full monthly fee, and can pay off their bill when it is convenient to them.
• Credit limit - your credit limit is a figure representing the maximum amount of money that you are permitted to spend on your credit card.
• Credit reference agency - credit reference agencies possess financial and personal records on UK residents and are used by credit card companies to assess the suitability of applicants. You are allowed to request a copy of your own credit file.
• Credit scoring - the method by which applicants are assessed for suitability. Many factors, including the client's age, income and credit history will be considered and points allocated accordingly. An applicant whose score falls above a certain level will be successful.
• Interest - this is the term referred to the annual fee you are charged for borrowing money. Credit card accounts will accrue interest continually as long as the balance is not paid off within the pre-determined interest-free period.
• Issuer - this term is used to describe companies and institutions that provide credit cards to their clients.
• Merchant - any business which accepts payment by a credit card is known as a merchant.
• Overseas transaction - a transaction made in a country other than the one in which the card was originally issued. Such transactions will appear in sterling on your monthly statement and you may be charged a small fee for the privilege.
• PIN - stands for 'personal identification number'. This personal number allows cardholders to make withdrawals from cash machines.
• Revolving credit - this term is used to describe the type of credit offered by a credit card. Revolving credit allows the client to make payments or borrow more, as they choose, without the necessity of consulting the lender.