Credit card 101: Balance transfers, interest rates, cash advances and more, defined

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

Using credit cards to pay for your everyday purchases can provide you with benefits that other forms of payment cannot. Credit cards make it easier for you to track your spending, offer more protection than cash, give you an opportunity to build your credit rating and increase your borrowing power.

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 of money a credit card company charges you each year for having an account. Generally, the fee is assessed regardless of whether you use your card. Not all cards have annual fees.
  • Interest Rate: The total percentage of interest you will pay on your debt over the course of a year.
  • Balance transfer: A transaction in which you use available credit on one account to pay off another account. Balance transfers allow you to move your debt to an account with a lower interest rate. However, there can be a fee associated with these transactions. It is important to weigh the fees against the amount of money the balance transfer will save you. You can request a balance transfer by calling Credit Card Services at 1-800-465-4653 or through Online Banking Customer Services: look for “Transfer your balance” listed under “Banking Services”.
  • Cash advance: A transaction that allows you to convert some of your credit into cash. A few ways you may be able to obtain a cash advance are:
    • Using your credit card to withdraw cash from an ABM
    • Taking your credit card to a bank and making a cash withdrawal
    • Using a cash advance cheque provided by your credit card company

A cash advance is essentially a cash loan against your credit line. Typically, it incurs a fee. Credit card rewards or points (for example, Aventura® Points or cash back) aren’t awarded for cash advances.

  • Grace period: A time period, usually 21 to 25 days, during which you are not charged interest. Paying off your credit card in full by the due date each month can help you avoid paying interest on your purchases.
  • Minimum payment: The minimum amount you are required to pay every billing cycle if you carry a balance on your credit card. It is generally calculated as a percentage of your account balance (although other amounts may be added in). You must make the minimum payment to keep your account current, but be aware that interest will be charged if you pay less than your full balance.

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.

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