A listing of important words and their descriptions used in credit cards documents and terms. It’s important to understand the language the credit cards companies use to market their credit cards. The resources will help you understand what you are getting into when you are applying for a credit card in Canada.
Annual Percentage Rate (APR) – The APR is the interest rate charged on a loan. It is expressed as a percentage and reflects the cost of borrowing money.
Account Balance Coverage – Sometimes referred to as credit balance insurance. It is an insurance policy on your credit card account should you experience a life altering event or other hardship. Account balance coverage is typically a fee based product.
Annual Fee – An annual fee is the yearly cost of cardmembership. The fee varies with each card.
Authorized User – A person who has some privileges on a credit card account, but cannot make account changes or request certain card features.
Balance Transfer – Moving a balance from one card to another, typically to take advantage of lower interest rates.
Cash Advance – Taking out a cash loan on your credit card. Cash advances are typically charged at a higher interest rate, and can sometimes carry additional fees. Use sparingly.
Consumer Disclosure Statement – A CDS is your Canadian credit report. The statement contains information about your credit history that lenders use to determine your creditworthiness.
Credit Score – In addition to your Consumer Disclosuer Statement, lenders use a standardized credit score which attempts to classify each applicant based on previous credit history.
Equifax – One of the two Canadian credit bureaus.
Grace Period – The amount of time a lender provides for borrowers to repay a balance before accruing interest.
Instant Approval – Some credit card companies will attempt to qualify your application upon submission of an application. Typically, people with established credit histories will get a decision in seconds.
Introductory Rate – To entice potential customers, some cards offer lower rates or other benefits for a brief amount of time. Good for balance transfer and those seeking bonus rewards.
Issuer – An issuer is loosely defined as a bank that issues a credit card to a consumer.
Minimum Payment – If you carry a monthly balance, there will be a minimum amount due on a specified date. Failure to pay the minimum on time will result in fees and/or other penalties.
Net Purchases – Net purchases refer to all purchases minus any returns or chargebacks. Used in the calculation of rewards or fees.
Secured Card – A credit card with a credit limit that is backed by a deposit or savings account. These cards can be useful for people with bad credit or those new to Canada.
Security Deposit – The security deposit is the amount of funds required to open a secured card account.
Social Insurance Number – A government issued number required to work or receive benefits in Canada. Some credit card applications require your Social Insurance Number to confirm your identity.
TransUnion – One of the two Canadian credit bureaus.