Glossary

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20 terms

Annual fee

A yearly charge for holding a card. It is worth paying only if the rewards and perks you use are worth more.

APR (annual percentage rate)

The yearly interest rate charged on a balance you do not pay off. Many Canadian credit cards charge around 20% or more on purchases.

Charge card

A card, such as the American Express Platinum, that requires you to pay the full balance each month instead of carrying one.

Chequing account

An everyday account for deposits, bill payments and debit purchases. Compare monthly fees and what balance waives them.

Credit report

The record of your accounts and payments kept by Equifax Canada and TransUnion Canada. Lenders use it to calculate your score.

Credit score

A number, usually from 300 to 900 in Canada, that summarizes how reliably you repay debt. Higher is better.

Credit utilization

How much of your credit limit you are using. Keeping it low, often under about 30%, helps your score.

Direct deposit

Money, such as your pay, paid straight into your bank account. It can help you avoid some monthly account fees.

Exchange rate markup

The difference between the rate a bank gives you and the true market rate. It is a hidden cost when you send or spend money abroad.

Foreign transaction fee

An extra charge, commonly about 2.5%, on purchases made in another currency, including online orders from abroad.

Grace period

The time between your statement date and the due date when you can pay in full without interest. Card issuers must give at least 21 days.

Hard inquiry

A record created when a lender checks your credit because you applied. Many applications in a short time can lower your score.

Interac e-Transfer

A way to send money between Canadian bank accounts using an email address or phone number. Some accounts charge a fee for each one.

Minimum payment

The smallest amount you must pay each month to avoid penalties. Paying only the minimum means you pay a lot of interest.

RRSP (Registered Retirement Savings Plan)

A registered account for retirement savings. Contributions can lower your taxable income, and withdrawals are taxed.

Secured credit card

A card backed by a deposit you give the issuer. It is a common way to build credit with no history.

Social Insurance Number (SIN)

A nine-digit number you need to work in Canada and to access some government programs. Keep it private.

TFSA (Tax-Free Savings Account)

A registered account where investment growth and withdrawals are not taxed. You have a yearly contribution limit.

Welcome bonus

Points or cash a card gives you after you spend a set amount in the first months. Check the spending requirement and the annual fee.

Wire transfer

A bank-to-bank transfer, often used for international payments. Fees can be high on both ends.