Glossary
Credit card terms, in plain English
Every term you will meet on a Canadian credit card application, defined simply and linked to a full guide.
Annual fee
A yearly charge to hold a card. Premium and rewards cards often charge one; many no-fee cards do not. Whether it is worth it depends on the rewards and benefits you actually use.
Full guide →APR (Annual Percentage Rate)
The yearly interest rate charged on balances you carry past the due date. Most Canadian cards sit near 19.99 to 22.99 percent for purchases, with separate, usually higher, rates for cash advances.
Full guide →Authorized user
Someone you add to your card who can spend on it, while you remain liable for the balance. Different from a joint account holder, who shares legal liability.
Full guide →Balance transfer
Moving debt from one card to another, usually to a low promotional rate. A transfer fee (often 1 to 3 percent) typically applies and the promo rate ends after a set window.
Full guide →Cash advance
Borrowing cash against your credit card. It usually starts accruing interest immediately with no grace period, plus a per-transaction fee, often at a higher rate than purchases.
Full guide →Credit limit
The maximum balance your issuer lets you carry. A higher limit can lower your utilization ratio if your spending stays the same.
Full guide →Credit utilization
The percentage of your available credit you are using. Keeping it low, often under 30 percent, generally helps your credit score.
Full guide →Foreign transaction fee
A surcharge, commonly 2.5 percent in Canada, added to purchases made in a foreign currency. A few cards waive it.
Full guide →Grace period
The interest-free window on new purchases, at least 21 days under Canadian rules, that applies as long as you pay your previous statement balance in full.
Full guide →Hard inquiry
A credit check triggered when you apply for credit. It can dip your score slightly and stays on your report for a few years. A soft inquiry, like checking your own score, does not affect it.
Full guide →Information box (disclosure box)
The mandatory summary of a card's key costs, interest rates, annual fee, grace period, and fees, that issuers must show before you apply.
Full guide →Interchange fee
The fee a merchant's bank pays the cardholder's bank on each transaction. It funds much of the rewards you earn and was reduced for small businesses under recent Canadian agreements.
Full guide →Minimum payment
The smallest amount you can pay by the due date to keep the account current. Paying only the minimum costs far more in interest over time.
Full guide →Points and miles
Rewards currencies (Aeroplan, Avion, Scene+, Membership Rewards, and others) earned on spend. Their cash value varies by how you redeem.
Full guide →Secured credit card
A card backed by a refundable security deposit, used to build or rebuild credit. Unlike a prepaid card, it reports to the credit bureaus.
Full guide →Statement date vs due date
The statement date closes your billing cycle; the due date, at least 21 days later, is when payment is required to avoid interest and keep the grace period.
Full guide →Welcome bonus
A sign-up reward (points or cash) earned after meeting a minimum-spend requirement within a set time. Some cards also waive the first-year fee.
Full guide →Ready to put it into practice?
Browse Canada's cards ranked by real value, every figure linked to the issuer's own page.