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Credit Card Glossary from A to Z


Allocation of Payments
When you make a credit card payment, that payment is applied to paying down balances for purchases, balance transfers, and cash withdrawals in a certain order. This varies by credit card. Check your credit card agreement for specific details.
Annual Fee
Some credit card providers will ask you to pay a set cost once a year – this is called the Annual Fee. This fee will be the same no matter what you spend on your card. If you’re a Luma cardholder, you don’t have to pay an annual fee.
APR stands for “Annual Percentage Rate” and represents the amount it costs you to borrow. When you use your credit card and carry a balance, you will be charged the interest amount reflected by your card’s APR. The larger the APR, the more you will have to pay back. Check your credit card agreement or monthly statement for specific APR information.
This stands for Automated Teller Machine, also known as a cashpoint. You can withdraw money using your Luma card and other credit cards at many ATMs. If you do so, however, higher interest and additional fees may apply.


Balance Transfer
When you owe money (a balance) on one credit card you can move it to another card (the transfer). This is usually done to take advantage of another card’s lower interest rate. When you make a balance transfer you will usually be charged a fee (the balance transfer fee). The fee is typically a percentage of the amount you are transferring. Your credit card agreement has more information about balance transfers and related fees.


Card Verification Code (CVC)
You’ll see this on the back of your card on or around the signature strip. The CVC number is often used when the cardholder isn’t present, as an extra security measure. You may be asked for it when buying things online or over the phone. The CVC is also sometimes called CVV or CVV2. If this has worn off your card, be sure to ask your credit card issuer for a new card, as you can’t make many online purchases without providing a CVC.
Cash Advance
If you take cash out of an ATM or cash point with your card it is considered a cash advance (or cash withdrawal). You will usually pay a higher rate of interest for these types of transactions. Additional ATM fees may apply. There are other types of transactions that can be classed as cash advances, such as buying foreign currency or betting transactions.
Some credit cards offer you money back when you use your card. The cash you get back is generally a percentage of what you have spent on your credit card. It can be paid either annually or monthly.
Credit Card Number
You will find this on the front of your card, across the middle. It’s the longest number on your card. Your Luma card number is 16 digits long.
Credit History
This is the record of how you have looked after your money in the past. It includes what you have borrowed or tried to borrow and contains any financial contracts you’ve entered into, such as a mobile phone contract. Your credit history is outlined in your credit report.
Credit Limit
Every credit card has a credit limit. This is the maximum amount your credit card company is willing to lend you on your card. Luma cardholders benefit from manageable credit limits of up to £1500. It makes sense to spend below this limit, so you have credit available for any interest you need to pay. If you go over your credit limit, you may have to pay a fee.
Credit Rating
Your credit rating comes from the credit report that is created by credit reference agencies. Those with higher credit ratings are more likely to be accepted for credit products. People with higher credit ratings also receive favourable interest rates and other benefits, like lower fees. Note that this is slightly different from a credit score, a term sometimes used interchangeably.
Credit Reference Agency
These are companies that gather information about you from multiple sources to create an independent view of your overall financial health.
Credit Report
Your credit report contains information about you and your credit history and is used to get an overall picture of your financial stability. Your credit report is held by credit reference agencies whom you can contact to review your report. The information in your credit report is regularly collected from diverse sources including your bank, mobile phone company, and the Electoral Roll. This information is sold by credit reference agencies to providers of products and services that need an independent assessment of your financial health.
Credit Score
Credit providers (the institutions providing you with a credit card or a loan) assign you with a credit score. This is based on the information you provide and the data contained in your credit report. Credit scores help card providers decide if you qualify for a given credit card. If you do qualify, credit scores are also used to determine which credit limits, interest rates, and other card features are available to you.
Credit Worthy/Worthiness
This refers to a lender’s assessment of how likely you are to pay back your debts as a customer.


Direct Debit
An arrangement between a customer and a bank or building society, direct debits authorise the financial institution to allow another organisation to take a regular payment from the customer’s bank account. Paying bills by direct debit is an easy way to avoid late payments.


Fixed Rate
This is an interest rate that remains the same over a set period of time. Note that some interest rates are variable, meaning they can change over time and in certain conditions.


Interest-Free Period
When you buy things with your credit card, you will have a number of interest-free days until you have to pay additional interest charges. Paying off your balance before interest kicks in means you won’t pay more for a given purchase in interest charges.
Introductory Interest Rate
This refers to a special rate of interest, for a specific type of transaction – these are always for a limited time period. New purchases and balance transfers are the most common transactions with introductory interest rates.


Minimum Payment
In a given month, this is the lowest amount of money you need to pay towards the amount you’ve borrowed. Your minimum payment is usually a small percentage of your outstanding credit card balance and can change if your balance goes higher. If you’re having trouble paying even your minimum payment, get in touch with your credit card provider.


Online Account Management
Online account management means you can use the internet to view credit card statements, make a payment, and get automatic alerts for certain types of account activity. Online account management can be more secure than more traditional methods involving paper documents. Luma cardholders benefit from a wide range of online account management features.
Outstanding Balance
This is the total amount you owe on your monthly statement, and includes all interest and charges.


Payment Date
This is the day and time when your payment is due to your credit card provider. It is essential that you pay your payment on or before the payment date to avoid late fees. Paying on time is an important part in building your credit rating.
PIN (Personal Identification Number)
This is the 4-digit code that helps keep your card secure. It’s assigned at first, but you can change it to something more memorable. When you make purchases in shops, you will use your PIN to authorise payments. You also use your PIN at an ATM to make cash withdrawals. Because this is such an important part of your card’s security, you should always keep your PIN a secret. Don’t even reveal it to your credit card issuer and never keep your PIN with your card.