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Jargon buster

APR
Annual Percentage Rate. This is the overall cost of borrowing if you owe money on your credit card.

Card issuer
The bank, building society or store whose name is on your card.

Chip and PIN
Your unique four-figure number which you must use when you spend with your card.

Credit limit
The maximum amount you may owe through spending on the card. If you go over this limit, your card may be refused and you may also have to pay extra charges.

Credit scoring
The system your card issuer uses to decide whether to provide you with a card, and to set your credit limit. Credit scoring works by awarding points to the information you provide on your application form and to the information recorded on your credit report (held by a credit reference agency). See Credit scoring for more information.

Interest
The amount you'll pay on any money you still owe after the interest-free period each month.

Interest-free period
The time between when you buy something on the card and the date when you must pay your monthly bill. This can be 50 days or more and is interest-free. So if you settle your bill in full every month, it's free borrowing.

Minimum payment
The amount you must pay each month to keep your account in order.

Outstanding balance
Any money you owe on the card.

Payment Protection Insurance (PPI)
An insurance policy that can pay an agreed amount if you're unable to earn because of illness or redundancy. This can therefore help to keep up your payments to the card.

Statement
Your monthly credit card bill that shows what you've spent, what you owe, the minimum you must pay and the latest date you can pay it.