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Credit Card Glossary

Credit card jargon can be confusing sometimes. Our Credit Card Glossary is here to help. Search the definitions of common credit card terms, all explained in easy-to-understand language so you can manage your credit card with confidence.

Additional cardholder

As the primary cardholder, you can allow another person to have a card on your account – this is known as an additional cardholder. Please note, the primary cardholder is legally responsible for transactions made by the additional cardholder.

Annual fee

This is the fee charged annually for the use of the credit card.

Annual Percentage Rate (APR)

This is the rate applicable to retail purchases that do not qualify for an interest free period.

Average daily balance

The average daily balance is determined by adding up all balances during the month and then dividing the total sum by the number of days in a given billing cycle. Most credit card providers calculate the average daily balance based on the annual percentage rate.

Bank Identification Number (BIN)

This is a unique identifying number of a financial institution – typically represented within the first six digits of a debit or credit card.

Balance transfer

This is the act of transferring the outstanding balance on your credit card to another card, usually with a lower rate.

Balance transfer fee

A fee charged when making a balance transfer. It may be a flat fee or a percentage of the transfer.

Balance transfer interest

This is the interest charged for the money paid by balance transfer to your credit or store card with another financial institution.

Billing Cycle

The days during a given statement period in which transactions are recorded.

Buy Now Pay Later (BNPL) / Instalment Payments

A function that allows the cardholder to pay off a portion of their balance (or a purchase) in set repayment amounts over a defined time period, separate to Interest Free Day(s) rules (where applicable).

Cash advance

Withdrawing cash from a credit card is called a cash advance. Cash advances usually incur additional fees and/or a higher rate of interest.

Cash advance interest rate

This is the interest charged on cash advance balances.

Cash-advance fee (CAD)

A fee charged when you use a credit card for a cash advance, such as withdrawing cash from an ATM. This may be a flat fee or a percentage of the amount of the cash advance.

Card Reader

An electronic device that reads the encoded chips or magnetic strips in credit cards or debit cards. More commonly known as a Merchant Terminal – and are used to gain approval for transactions at the point of sale.


This is the term used when a credit card has been fraudulently duplicated. It is also known as 'card skimming'.


Some credit card providers offer cash payments / credits back to a credit card, based on a cardholder's spending pattern(s).


The process of 'charging back' an amount from a prior transaction from a merchant. This often happens as a result of a dispute raised by the cardholder against the merchant.

Charge card

Rather than having a set credit limit / credit line, with this type of card the closing balance of the statement cycle period must be paid off by the specified due date.

Closing balance

This is the total amount payable (sum of all transactions including any fees and charges) payable within a statement cycle period.

Credit bureau / Credit reporting agency

A credit bureau is a company that collects, holds and distributes data from credit providers about a borrower’s financial history. This information is then used to calculate your credit score which is recorded on your credit report. There are three main credit agencies in Australia – Experian, Equifax and Illion – which all use their own scoring system to determine your credit score.

Credit Card

A card issued by a bank to a customer with an approved credit limit / credit line that a customer can spend up to and repay at a later date, usually with interest when the closing balance is not repaid in full by the due date.

Credit card number

This is the number imprinted on your credit card and it is unique to your credit card account. The first six digits are the issuer's Bank Identification Number (BIN).

Credit limit / Credit Line

The maximum amount you can spend with your credit card before having to pay off some of the balance is called your credit limit/ credit line.

Credit report

This is a history of loan and bill payments, kept by a credit bureau and used by financial institutions and other potential creditors to determine the likelihood that your future debt will be repaid. Lenders and insurers use information from credit reports, along with your credit score, to set loan and insurance rates.

Credit score

A number that summarises your credit record and history. The score is based on several factors, including whether you pay your bills on time, your current level of debt, the types of credit and loans you have, and the length of your credit history.


This is the term for the bank or lender that is owed money.


A security verification code found on a credit card, sometimes as a 3 or 4-digit number on the back or front of the card. This code helps verify authenticity, typically requested with over-the-phone transactions. Depending on the card, it may be called a CID (American Express), CVV2 (Visa), or CVC2 (Mastercard). When you pay for something online, by mail order or over the phone you may be asked to quote the CVC to prove that you have the credit card in front of you.

Debit card

A debit card is a card linked to your savings account which uses your own funds to complete a transaction.

Debt consolidation

Debt consolidation is the process of taking out a new loan to pay off other existing loans.


When a customer fails to make the necessary payments on a loan or credit card debt. Defaults can be detrimental to your credit report and can impact your ability to be approved for a loan or credit card in the future.

Direct debit

A direct debit is an automatic payment you can set up for your regular bills, so you never miss a payment. Most people set up direct debits for things like rent, insurance or gym memberships. Direct debits can also be set up from a bank account to make repayments to a credit card.


Electronic Funds Transfer is the transfer of money between accounts by electronic machines like ATMs, home computers, and EFTPOS machines.


Electronic Funds Transfer at Point Of Sale. Usually, this refers to a small machine that merchants use to receive payments from credit and debit cards.

Full balance

This is the entire amount spent on your card that month.

Foreign Exchange Fee / FX Fee

A fee charged when a purchase is made in a foreign currency.

Interchange fee

Fees paid between your bank and a merchant's bank to accept card transactions.


This is the money paid regularly at a particular interest rate for the use of money lent, or for delaying the repayment of a debt.

Interest rate

This is the rate at which your outstanding balance increases per payment period when it goes unpaid.

Interest-free days

This is the number of days you have to pay your bill in full before an interest charge is assessed on purchases. It is the period of time between the date of a purchase and when the payment is due. This period typically does not apply to cash advances.

Interest free period

Most credit cards offer an interest free period on purchases up to a certain number of days. Your interest free period is the time between when you make a purchase and the due date for payment on your statement – as long as you pay the full amount owing by the due date and don't already owe money on your credit card from a previous statement.

Introductory rate

Some credit cards come with a special, lower balance transfer and/or annual purchase rate when you first open them. These are called introductory rates and last only for a set period of time – after any introductory rates end, you'll roll on to a standard rate set out by the Bank.

Late payment fee

A late payment fee is a fee payable if your credit card provider hasn't received your minimum payment by the due date on your statement.


The retailer / shop / seller of a good or service that accepts a cardholder's payment is known as a merchant.

Minimum payment

This is the listed minimum payment your credit card statement that you are required to pay at the end of the month.

Monthly statement

Each month you receive a statement, summarising your credit card account for that month. This includes:
  • Details of all your transactions for that statement period
  • Any interest, charges or fees
  • Your opening balance
  • Your closing balance
  • The minimum amount due
  • The payment due date

MOTO (Mail Order / Telephone Order)

These are transactions completed by a cardholder with a merchant where the card is not physically present.

Over Limit Fee

This is a penalty fee charged to you for exceeding your credit limit.

Payment due date

This is the date your credit card payment is due. You’ll find the payment due date on your monthly statement, and you must pay the minimum payment by its due date.

Personal Identification Number (PIN)

All credit cards issued in Australia require a PIN to use. This is a secret 4 digit number known only to the cardholder to authorise point of sale (card present / physical) transactions.

Penalty fees

A penalty fee is a fee charged if you violate the terms of your cardholder agreement or other requirements related to your account. For example, your bank may charge a penalty fee if you make a late payment or if you exceed your credit limit.

Primary Cardholder / Account Holder

The cardholder legally responsible for the credit card account, transactions made on the account as well as the associated repayments.

Rewards program

A Rewards Program will often consist of provision of “Rewards Points” to the cardholder provided based on transaction activity / spend. Reward Points can then typically be used to redeem gift cards, cash back, flights & hotels and/ or general merchandise.

Statement Period / Statement Cycle

This refers to the period of time in which purchases are made and recorded to form the closing balance at statement generation date.

To 'Carry a balance'

Carrying a balance refers to not paying off the entire amount owed, in full, when the bill comes due.