Annual Fee
A charge levied each year for use of a credit card. It's billed directly to your monthly statement. However, some 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 17 and 30 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.

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.