Credit Card

Definition of 'Credit Card'

A credit card is a thin plastic card measuring 85.6mm x 53.98mm, with rounded edges, designed to be carried easily in a purse or wallet. A credit card enables payment to be made for goods or services, either in person, on production of the card, or via distance selling such as the internet or over the phone.

The credit card is linked to an account which is in the sole name of an account holder, known as a cardholder. The cardholder is given a credit limit on the credit card, which puts a ceiling on the amount of spending that can be undertaken on the credit card.

Credit cards are a convenient way of making payment, enabling the cardholder to pay either the full amount owing on the card at the end of a monthly statement interval, or instead to pay a set minimum amount, which varies from credit card to credit card, of around 3% of the balance owing.

If a credit card is paid in full each month, no interest is charged. If only part of the credit card account is repaid, the balance is charged at a variable interest rate that is determined by the credit card issuer. Typically this is in the region of 15%, but for high risk cardholders, the rate may be double this, and for low risk cardholders, the rate may be half of the typical rate.

Other types of payment card are charge cards, where the balance must be paid in full each month and there is no scope to take extended credit. Store cards are issued by retailers and operate similarly to credit cards, but may be restricted to purchasing from the store issuing the card.

Both interest rates and features of credit cards vary enormously. If you use our Find a Lender service, which is free, you can make a more informed choice of which credit card to pick, based on the credit cards that we believe are matched to your credit standing.

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Credit Jargon Starting 'G'

Credit Jargon Starting 'I'

Credit Jargon Starting 'J'

Credit Jargon Starting 'L'

Credit Jargon Starting 'M'

Credit Jargon Starting 'S'

Credit Jargon Starting 'T'

Credit Jargon Starting 'V'

Credit Jargon Starting 'W'

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