|  Annual
Fee A charge levied each year for use of a credit card.
It's billed directly to your monthly statement. However, many credit
cards come without an annual fee.
Annual Interest Rate The annual interest rate
charged on purchases that don't benefit from the interest-free period.
There is no interest-free period for cash advances or balance transfers,
and interest is charged from the day you withdraw the funds.
Balance Transfer The transfer of an outstanding
credit card balance from one card to another, usually between different
institutions. The new card issuer usually charges interest from
the day the amount is transferred to the new card -- there is no
interest-free period.
Cash Advance The withdrawal of funds from your
credit card, up to the credit limit allowed. The amount you withdraw
may be subject to daily limits. There is no interest-free period,
so interest is charged from the day you withdraw the funds.
Convenience Cheque A cheque provided by the
credit card issuer and drawn on your credit card account. You can
use a convenience cheque the same way you would a personal cheque.
When you use a convenience cheque, the transaction is treated as
a cash advance for the purposes of calculating interest charges
- there is no interest-free period and you're charged interest until
you pay back the amount of the cheque in full.
Grace Period The grace period is the time between
the statement date and the payment due date, and is determined by
the credit card issuer. The grace period usually varies between
15 and 26 days and is part of the interest-free period. The grace
period may not apply unless you meet certain conditions.
Interest-Free Period The interest-free period
on new purchases starts on the date you make a purchase and ends
when the credit card issuer begins charging you interest on that
purchase. The interest-free period includes the grace period determined
by the credit card issuer. It may not apply unless certain conditions
are met.
Method 1 The method used by some credit card
issuers to determine whether the interest-free period applies to
your new purchases. With this method, it applies only if you pay
your current month's balance in full by the due date.
Method 2 The method used by some credit card
issuers to determine whether the interest-free period applies to
your new purchases. With this method, it applies only if you pay
your current month's balance in full by the due date, and you have
also paid your previous month's balance in full by the due date
(in other words, you're not carrying a balance from the previous
month).
Minimum Payment The minimum amount payable
each month on your credit card balance.
Penalty Interest Rate The rate at which penalty
charges are calculated. It only applies to charge cards.
 Prime
Rate The interest rate a financial institution charges on
loans to its best customers.
Reference Rate A base rate, such
as the Prime Rate, used in the calculations of variable credit card
interest rates.
Reward Program A program offered by credit
card issuers that gives cardholders rewards for using their credit
card. You collect reward points every time you charge a purchase
to your card. You can usually redeem these points in merchandise,
travel or cash, depending on the program.
Security Deposit The amount you
deposit with a credit card issuer as security to obtain a secured
credit card.
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