When it comes to understanding what a credit card is and how best to use it, knowing some of the key terms can help you have full confidence in your decisions and remove any confusion. Show
Additional cardholderAs the primary cardholder, you can allow another person to have a card on your account. The person who uses this card is called the additional cardholder. The primary cardholder is legally responsible for transactions made by the additional cardholder. Annual feeThis is a fee you pay for having access to a credit card. The fee is usually payable once a year (on or around the date you first activated your card) and varies depending on the type of credit card. Balance transferAn amount we pay to your credit or store card with another Australian financial institution or third party at your request. We may agree to charge a special interest rate for a set period on this amount. Balance transfer interestThe interest charged for the money paid by balance transfer to your credit or store card with another financial institution. Cash advanceAny money you access under your account, except a purchase or balance transfer, is a cash advance. Cash advances include:
Cash advances attract a fee and interest from the date of the cash advance. There’s no interest free period on cash advances. Cash advance interest rateThis is the interest rate charged on cash advances. Closing balanceThe total amount of money you owe on your credit card at the end of each statement cycle. Credit limitThe maximum amount you can spend with your credit card is called your credit limit. If you want to, you can apply to increase (or choose to decrease) your limit at any time in NetBank or the CommBank app. Credit scoreYour credit score (sometimes also called your credit rating) is based on your borrowing and repayment history – and includes how often you’ve shopped around for credit too. Lenders will use this rating, alongside their own risk criteria, to decide whether to lend to you, how much and at what rate of interest. CVCCVC stands for Card Verification Code. It's a security code that's encoded or printed on your credit card. When you pay for something online, by mail order or over the phone you may be asked to quote the CVC to prove that you have the credit card in front of you. InterestInterest is what a borrower pays a lender for the use of their money. How much interest you’ll pay depends on the type of card you have, the transactions you make and when you make payments. Interest free periodMost credit cards offer an interest free period on purchases up to a certain number of days. Your interest free period is the time between when you make a purchase and the due date for payment on your statement – as long as you pay the full amount owing by the due date and don’t already owe money on your credit card from a previous statement. Late payment feeYou'll be charged a late payment fee if your credit card provider hasn’t received your minimum payment by the due date on your statement. Minimum paymentThe minimum amount you must pay by the payment due date. Monthly statementEach month you receive a statement, summarising your credit card account for that month. This includes:
Payment due dateYou’ll find the payment due date on your monthly statement and you must pay each minimum payment by its due date. Personal Identification Number (PIN)All credit and debit cards issued in Australia require a PIN to use. Purchase interest rateThe purchase interest rate is the rate of interest charged when you use a credit card to buy goods and services, such as groceries from the supermarket, clothes from a store, paying bills or insurance. How interest is calculated depends on the type of card you have, the transactions you make, and when you make payments. Regular paymentA regular payment is when you set up an automatic payment for regular bills. By setting up a regular payment, you can pay bills automatically with your credit card, so you don’t need to worry about missing a payment. Statement cycleThe statement cycle is the time between the statement start date and the statement end date. What does a $500 minimum credit limit mean?The meaning of minimum credit limit is the least amount of credit that the bank will offer you on application. The maximum limit is the most that the lender will offer you to borrow.
What is the minimum credit limit?If your credit limit is $10,000, then you are not able to have more than $10,000 in debt on the credit card. It's not uncommon for different credit cards to have varying minimum and maximum credit limits. The minimum credit limit is often between $1,000 and $2,000, while some cards have a maximum of up to $100,000.
How much of a 500 dollar credit limit should I use?You should aim to use no more than 30% of your credit limit at any given time. Allowing your credit utilization ratio to rise above this may result in a temporary dip in your score.
What is a $200 credit limit?For example, if you are approved for a $200 credit limit, you must pay the card issuer $200 and your credit limit will be $200 — you can deposit more if you are approved for a higher limit. Unsecured cards don't require a security deposit but may have stricter requirements to qualify.
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