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Credit Card Terms and Glossary

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If you are planning to get a credit card and have been feeling rather stumped by all those fancy words that keep cropping up then you might need some help understanding them. While many of the terms used in relation to credit cards can be quite self-explanatory, there are some that are not so easy to understand. So without further ado, here are some of the most common terms used in relation to credit cards in Malaysia.


The APR actually stands for Annual percentage rate and refers to all fee and interest rates associated with the credit card.

Annual fee:

This is the fee that is charged by the bank for a credit card every year. It is a fixed amount and can, in some cases, be waived off in case purchases equalling a certain amount are done in a year.

Interest rate on Credit Cards

This is the interest that is charged on the outstanding balance on the credit card. There are some credit cards that don’t charge an interest rate because they subscribe to Islamic bank but most conventional bank do charge an interest. In some cases the interest rate is mention as x% per month so you must be especially careful while checking these rates.


When it comes to credit cards, any place that accepts a credit card for the purpose of payment for goods and services is classified as a merchant.


This is a term that is used to describe a person who pays at least the minimum amount due towards the credit card every month.

PIN for Credit Card

PIN stands for Personal Identification Number and is a number that can be used to authorise payments. It is employed in order to make credit card purchases more secure.

Fraudulent Transaction:

A fraudulent transaction can be one where a card has been used without the knowledge or consent of the cardholder.

Air miles:

With some credit cards, especially travel credit cards, every time there is a payment made, a certain number of air miles are added to the card holder’s account. These air miles are basically points that can be collected and redeemed at the time of booking flights using that card.

Credit Card Reward Points:

Reward points are points that can be earned when the cards are used to pay for purchases. These points can be used to get discounts on future purchases or exchanged for special items from the credit card providers.

Available Credit:

Available credit is just another way of saying available credit limit. It is your total credit limit minus any purchases that you have already made.

Average Daily Balance:

This is an average of the balance for a cardholder on a daily basis in one billing cycle. It is calculated by adding up each days balance then dividing it by the number of days in the billing cycle.

Bad Credit:

Bad credit refers to the credit score of a person which is bad and indicates to the banks that extending credit to such people may be a bit risky.

Credit Card Balance Transfer:

If you have two credit cards and you transfer what you owe on one credit card, onto the other then what you have done is referred to as a balance transfer.

Balance Transfer Fee:

This is the fee that is charged when the bank extends the balance transfer facility to a cardholder.

Cash Advance:

A lot of credit cards allow cardholders withdraw a part of their credit limit as cash. This facility is known as cash advance and depends on the available credit limit on the card.

Cashback on Credit Cards:

When a card is used to pay for a purchase then a part of that purchase is returned to the card. This is known as cash back and it is different from a discount because it does not reduce the actual price for the purchase, it just reduces what you may have to pay back to the bank.

Charge Card:

A charge card is similar to a credit card and allows the cardholder to pay for services and goods using the card. The main difference between this and a credit card is that while credit cards come with a limit, charge cards don’t always have a limit.

Credit Limit:

The credit limit is the maximum amount that a cardholder can spend using a particular credit card. It is fixed when the card is issued and can be increased by the bank.

Credit History:

The credit history refers to a person’s behaviour with the finance options made available to them. This means that it is a record of all the paybacks of credit cards and loans that a person might have to pay back.

Finance Charges:

Finance charges generally refers to all the charges that may be applied to a credit card in order to make various services available to customers.

Interest free Period:

If someone has no outstanding dues on their credit card then they may be extending an interest free period which basically is a period of time for which no interest will be charged on new outstanding balances.


When the monthly statement of account is generated, it assigns a last date for that payment to be made towards a credit card. If this date is exceeded when making the payment then it is known as a late payment.

Outstanding Balance:

The outstanding balance is the sum of all dues that are to be paid towards a credit card. This can include the amount that has been spent and any interest that is applicable on the balance.

Minimum Monthly Payment:

Most banks determine that if a card is used then a minimum amount needs to be paid towards that card. It is generally a percentage of the outstanding balance, example 5% of the outstanding balance.

Payment Due Date:

This is the last date by which payments towards a credit card need to be made.

Principal Cardholder:

With many credit cards, the cardholder can take supplementary cards based on one main credit card. The person who holds the main card is known as the principal cardholder.

Supplementary Cardholder:

When supplementary cards are issued based on a credit card, the person to whom that card is issued is known as the supplementary cardholder.

Statement of Accounts:

The statement of accounts is a document that details all the expenses paid for using the card within one billing cycle. It also details any outstanding balances, new purchases, minimum amount due and the payment due date.

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