Credit card basics

If you’re thinking about getting your first credit card, understanding some common features and benefits can help you make an informed decision about which card will work best for you.

From tracking spending to building credit and increasing buying power, understanding basic terms can help you take advantage of all the features your credit card provides.

Understanding key credit card terms

Before you apply for a credit card, familiarize yourself with basic terminology. Knowing these terms can help you select a card, use it wisely and understand your statement.

  • Annual fee: The amount paid each year for access to all the benefits and features of your credit card. Generally, the fee is paid whether you use your card or not. Not all cards have annual fees.
  • Annual interest rate: The total percentage of interest paid on your debt over the course of a year. You pay interest if you haven’t paid off your full balance (the money owed) by the due date every month.
  • Account balance: The total debt owed at a given point, including your previous statement balance, minus any payments you made since that statement.
  • Available balance: This is the money left to make new purchases. 
  • Balance transfer: By using available credit on one account to pay off another, balance transfers let you move your debt to an account with a lower interest rate. Fees may apply. 
  • Cash advance: A transaction that lets you convert some of your available balance into a cash loan or balance transfer. You can get a cash advance from a Banking Centre, ATM or by cheque. Fees usually apply.


  • Credit limit: The maximum balance that you can have outstanding on your credit card account at any given time.
  • Current balance: Total of all outstanding balances – money owed – and posted transactions as of the current date.
    Note: Current balance does not include pending transactions.
  • Grace period: The time between the statement date and payment due date - usually 21 to 25 days - when you’re not charged interest. If you pay your credit card in full by the due date each month, you can help avoid paying interest on your purchases.
  • Minimum payment: The amount you must pay by the due date every month to keep your account in good standing. You can find your “current month’s minimum payment” on your monthly statement.
  • Overlimit: Interest, fees or purchases may cause your balance to exceed your credit limit, which may result in an overlimit fee. This fee is charged the day you go over your credit limit, and on the first day of any statement period where you are still exceeding your credit limit.

Learn more or start your application with CIBC

The terms of your CIBC credit card are outlined in your cardholder agreement, so you can easily reference them. Use the credit card comparison tool to compare up to 4 cards and find the one that fits your needs. If you have questions about your credit card or opening a new account, you can reach a customer care representative at 1-800-465-4653.

Credit card 101

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