Glossary

Some cards charge a fee for additional cardholders. It is charged once a year at the same time as your annual fee.

The fee charged annually for the use of the credit card.

Australian Securities Exchange

This is determined by adding up all balances during the month, then dividing the total sum by the number of days in a given billing cycle. Most credit card providers calculate the daily balance based on the annual rate. So, for example, if the annual interest rate is 12 per cent, the monthly periodic rate would be 1 per cent. If the average daily balance on the card is $200, then the monthly charge would be $2.00.

Transferring the outstanding balance on your credit card or store card to another card, usually one with a better rate.

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

Withdrawing cash from a line of credit, usually incurs additional fees or a higher rate of interest.

Often called gift cards; a cash card is a prepaid card with a set balance. Can either be to a specific retailer or like a debit card that can be used with merchants using EFTPOS.

Rather than having a revolving line of credit, with a charge card, the full balance must be paid off every month.

The maximum amount you can spend with your credit card.

A report from a credit agency that contains a history of your payments on current and previous credit cards and loans. Lenders use your credit report to decide how likely you are to repay a future debt and whether or not to lend money to you.

A number that represents your credit worthiness, based on your credit repayment 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. Your credit rating is used by lenders when deciding whether or not to lend money to you.

The lending agency that is owed money.

When a consumer fails to make the necessary payments on a loan or credit card payment. Defaults cause serious damage to your credit report.

Allows you to access the money in your cheque or savings account electronically to make purchases. Either requires a PIN or signature to confirm identity, and the funds are removed from your account almost immediately.

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

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

A one-off fee which may apply to set up a personal or other loan.

An exchange-traded fund (ETF) is a managed investment fund that contains a basket of assets, which might include shares, bonds, commodities or more.

The entire amount spent on your card that month.

Fees paid between your bank and a merchant’s bank to accept card-based transactions.

The rate at which your outstanding balance increases per month if your bill is not paid in full.

The number of days you have to pay your bill in full before interest is charged on the outstanding balance. Interest-free days do not typically apply to cash advances.

An initial interest rate charged when you first acquire your credit card. These rates usually begin low, but revert to the standard high rates after a certain period of time.

Charged if you make a purchase either while overseas or shopping online from Australia, and the merchant or financial institution processing the transaction is located overseas.

This is charged if you don’t make your minimum payment by the payment due date.

A personal line of credit is a type of credit account that allows you to access a predetermined amount of money for a fixed window of time. While the account is open, you can borrow this money to finance purchases as needed.

Fee incurred if the aggregate of deposits made to the account in a month up to close of business on the last business day of the month is less than a specified threshold.

Margin lending is a type of loan that allows you to borrow money to invest, by using your existing shares, managed funds and/or cash as security. It is a type of gearing, which is borrowing money to invest.

The minimum amount of interest you will be charged if you are charged any interest. For example, if your total interest charge is $0.90 but the credit card company’s minimum interest charge is $1.00, you will be charged $1.00.

The amount listed on your bill as the minimum your bank requires you to pay off your credit card balance at the end of the month. If you don’t make your minimum payment by the payment due date, you may be charged a late payment fee.

Offset accounts work as a transaction account linked to your home loan. The money in that account ‘offsets’ daily against the balance of your loan. So, it reduces the interest you need to pay because interest is only charged on your net balance (i.e. your overall loan balance minus your offset account balance).

An overdraft occurs when you write a cheque, make an ATM transaction, use your debit card to make a purchase, make an automatic bill payment or other electronic payment, for an amount greater than the balance in your account.

A penalty fee charged to you for exceeding your credit limit.

Fees charged if you violate the terms of your cardholder agreement or other requirements related to your account. For example, if you make a late payment or if you exceed your credit limit.

A premium is the amount you pay an insurer for insurance cover.

This is the interest rate charged on purchases. Most credit cards come with an interest-free period on purchases of up to 55 days.

Any account in which there are not a scheduled number of payments and the full balance need not be paid off monthly. Credit cards are the most common type of revolving account.

Redraw is a simple way to access additional repayments that you have made on your home loan above the minimum required repayments, to pay for renovations or other expenses.

Once you have your home loan, you are required to make minimum repayments. If you make additional repayments above what is required and redraw is available on your home loan, these additional funds become part of your available redraw.

Benefits that come with the use of a credit card, often in proportion to the amount of money spent on it. Can come in the form of cash back, shopping vouchers, frequent flyer points and rewards.

A self-managed super fund (SMSF) is a private super fund that you manage yourself. SMSFs are different to industry and retail super funds.

A transaction account is traditionally used for day-to-day expenses and often comes with a debit card so that you can withdraw cash or pay for things.

When one financial institution treats a lender as if they had defaulted when the lender defaults with a different institution.