Key credit card terms you should know

Comparing credit cards is easier when you fully understand the different terms and features on offer. At first it might seem like providers are speaking a different language, but it doesn’t take long to become familiar with the common terms.

We’ve put together this glossary to explain any terms you may not already know.

Additional cardholder

With some credit cards you can have an additional cardholder, which means you could get an extra card for your partner or a relative to use. You will still be responsible for all credit card bills as the card is in your name. Additional cards are generally free, but some cards may charge a small fee, such as $10.

Annual fee

An annual fee is an administrative cost that you pay each year for using your card. The amount varies from card to card, and can range from $0 to $700.

Annual percentage rate

The annual percentage rate is the interest rate shown as a figure for the whole year rather than monthly amounts.

Balance transfer

A balance transfer is where you transfer a debt from another lender to a new credit card. This is typically done to take advantage of lower interest rates or an introductory interest-free period.

Cash advance

A cash advance is cash you withdraw from your credit card. Credit card providers typically charge a transaction fee for cash advances, as well as a higher interest rate than for purchases. There is often no interest-free period for cash advances.

Cash rate

The official cash rate is determined by the Reserve Bank of Australia (RBA) and is the interest rate of the overnight money markets. That is, the amount of interest a commercial bank must pay on a loan it takes out with the RBA. The official cash rate may affect the interest rate on your credit card, depending on your provider and whether your card’s rate is fixed or variable.