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Credit card toolkit

Credit card videos

There is nothing better than a video to explain things clearly. Our credit videos give you clear and simple explanations on all things credit related, including how to improve your credit score.

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4 ways to improve your credit rating

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What is a credit card eligibility checker & 4 reasons to use one


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Jargon buster

Understanding credit card jargon and finding your perfect credit card is not always an easy thing. Have a look at our credit card videos, jargon buster and FAQs to get clear information in simple terms.


Allocation of payment

Different types of transactions on credit cards attract different rates of interest. For example, cash withdrawals are usually charged at a higher rate than purchases. The allocation of payments usually dictates which type of transaction is paid off first when you make a repayment on your card. Some cards allocate payments to higher interest debts first (called a positive payment hierarchy) while some pay off cheaper debts first (known as negative payment hierarchy).

Annual fee

Some credit card providers charge a fee each year to carry or use their credit card. The annual fee is charged regardless of how much or what the credit card is used for.


Credit providers will advertise their products using their APR (Annual Percentage Rate of charge).

The APR makes it easy to compare different credit products before deciding which one is best for you. For credit cards the APR is based on the purchase interest rate and includes things like annual fees, although cash withdrawal charges and default fees are not included.


Bad credit

You may have bad credit if you have not made timely payments or defaulted on a loan. If you have bad credit, this may impact future applications from financial institutions and make it harder to obtain things such as credit cards, loans or mortgages.

Balance transfer

This is when you transfer debts or a balance from one credit card to another.

Balance transfer fee

A fee that may be charged when you transfer a balance from one credit or store card to another.


Card verification code (CVC, also known as CVV or CVV2)

Found on the back of your credit card (on or near the signature strip), the CVC number is an additional security feature normally used when the card holder is not present e.g. typically for purchases made over the phone or online.

Cash advance

If you use your credit card to take cash out of an ATM it will be classed as a cash advance or cash withdrawal. This type of transaction usually attracts a higher rate of interest than purchases and there might also be an ATM fee. Some other types of transaction are also sometimes classed as cash advances; for example, gambling transactions or buying foreign currency.


Cashback rewards you by giving back a percentage of the amount spent on your credit card. Cashback may be paid monthly or annually.


Collateral, or security, refers to the assets that a borrower promises to hand over if they are unable to repay a loan. For example, if you have a mortgage your home is the collateral.

Credit card number

The long number across the front of your credit card.

Credit history

Your credit history is held by credit reference agencies and is one part of your credit report. Basically, credit history is exactly that, how you have managed your finances in the past, including credit cards, loans or a mobile phone contract.

Credit limit

The maximum amount that your credit card company is prepared to lend you on your credit card. You should always leave some available credit on your credit card for any interest to be applied. If you exceed your credit limit you may be charged a fee.

Credit rating

Your credit rating is a score based on your credit report created by credit reference agencies. It takes all of your credit history and applies an overall score to it based on how you have managed your finances in the past, giving you a good general indication of how lenders are likely to view your application. It also looks at non-financial information such as court orders i.e. CCJ's, and whether you are on the Electoral Roll.

Find out how you can improve your credit rating.

Credit reference agency

Credit reference agencies are companies that collect information about you, for example information from the electoral roll, what credit card and store cards you have, your mobile phone contract suppliers, mortgage information etc - essentially anything financial. They also monitor how well you have paid these providers. The credit reference agencies then sell this information to credit providers which helps them rate your suitability for products and decide whether to accept your application.

Credit report

A credit report is information about you and your credit history that is stored by credit reference agencies. This information is gathered on an ongoing basis from many sources including companies that provide you with credit, mobile phone companies if you have a pay monthly contract and the electoral roll. Lenders, employers, landlords and other service providers buy that information to help them decide whether to approve your application for a loan, credit card, job or housing, or to offer you products or services.

Credit score

Your credit score will be created by the credit providers from the information you have given in your application, what's in your credit report, and your credit rating. The provider will use this credit score to decide whether you qualify for credit, what your credit limit could be and the interest rate.

Credit worthiness

A lender will make an assessment about how risky or 'credit worthy' you are when deciding how much they will lend you.


Direct debit

A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying amounts from their account.


Fixed rate

An interest rate which does not change for a set period of time.

Foreign currency handling charge

If you use your credit card overseas, some providers charge a foreign currency handling or loading charge to each transaction. This is normally 2-3% of the transaction. Not all cards charge these fees though, and the level of fees varies, so it's worth shopping around if you regularly travel overseas.


Introductory interest rate

This is a special rate of interest that applies to one or more types of transaction for a certain time period. The most common transactions to have introductory rates of interest are balance transfers and new purchases.


Minimum payment

Your credit card provider will specify a minimum repayment you need to make each month. (This is normally a percentage of your outstanding balance, although there is usually a minimum cash amount you have to pay). If you fail to make at least the minimum repayment each month you'll be charged a late payment fee.


Online banking

Also known as Internet banking, it allows customers to manage their accounts using the internet e.g. view transactions, statements, make a payment etc.



PIN stands for Personal Identification Number, this is the secret 4 digit code you choose for your card. When you pay for purchases in stores you will use your PIN to 'sign' for or authorise the payment. You will also use your PIN to access your account at an ATM.

Credit Made Clearer provides general information about credit and does not provide financial advice. If you require financial advice about a specific issue you should consult an independent financial adviser.

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