Carnet

Glossary

32 terms, defined in a sentence or two, each linked to the note that explains it properly.

A

Annual fee
A yearly charge for holding a credit card or account. A first-year waiver usually means the fee applies from year two. Read more about Annual fee
Average tax rate
Total income tax divided by total income. Always lower than your marginal rate in a progressive system. Read more about Average tax rate

B

Balance transfer
Moving debt from one card to another, often at a promotional rate. No interest-free grace period applies. Read more about Balance transfer
Basic personal amount
The amount of income on which you pay no federal income tax, delivered as a non-refundable credit. $16,452 federally for 2026, reduced for the highest incomes. Read more about Basic personal amount

C

Cash advance
Cash withdrawn using a credit card. Interest starts immediately, often at a higher rate, plus a fee. Read more about Cash advance
Cashback portal
A site or app that earns a commission when you shop through it and shares part of it with you, usually paid quarterly. Read more about Cashback portal
CDIC
Canada Deposit Insurance Corporation. Insures eligible deposits up to $100,000 per depositor, per insured category, at each member institution. Read more about CDIC
Contribution room
The amount you can put into a registered account without penalty. Calculated separately for TFSAs, RRSPs and FHSAs. Read more about Contribution room
Credit bureau
A company that keeps credit histories. Canada's two main bureaus are Equifax and TransUnion. Read more about Credit bureau
Credit score
A three-digit number, usually 300 to 900, that estimates how likely you are to repay credit. Higher is better. Read more about Credit score
Credit utilization
How much of your available credit you are using. Balances close to your limits can lower your score. Read more about Credit utilization

D

Deduction
An amount subtracted from your income before tax is calculated, such as an RRSP or FHSA contribution. It saves tax at your marginal rate. Read more about Deduction
Direct transfer
Moving a registered account between institutions without withdrawing. Does not affect your contribution room. Read more about Direct transfer

E

Emergency fund
Money set aside for sudden, unplanned needs. The FCAC suggests three to six months of expenses. Read more about Emergency fund

F

FHSA
First Home Savings Account. Deductible contributions, and tax-free qualifying withdrawals for a first home. $8,000 a year, $40,000 lifetime. Read more about FHSA

G

Grace period
The interest-free window between the end of a credit card billing period and the due date. At least 21 days with federally regulated issuers. Read more about Grace period

H

Hard inquiry
A lender checking your credit when you apply. Many in a short period can lower your score. Checking your own credit does not. Read more about Hard inquiry

I

Instalments
Quarterly tax prepayments (March 15, June 15, September 15, December 15) for people with income that has little or no tax withheld. Read more about Instalments

M

Marginal tax rate
The combined federal and provincial rate on your next dollar of income. Read more about Marginal tax rate
Minimum payment
The smallest amount you must pay on a credit card by the due date. Paying only the minimum keeps interest running on the rest. Read more about Minimum payment

N

Non-refundable tax credit
A credit that reduces tax owing but can't create a refund on its own, such as the basic personal amount. Read more about Non-refundable tax credit
Notice of assessment
The CRA's summary after processing your return: tax owed, your refund or balance, and your RRSP deduction limit. Read more about Notice of assessment

O

Over-contribution
Putting more into a registered account than your room allows. Taxed at 1% a month on the excess (RRSPs allow a $2,000 cushion). Read more about Over-contribution

Q

Qualifying withdrawal
An FHSA withdrawal that meets the conditions for buying a first home, and is therefore tax-free. Read more about Qualifying withdrawal

R

RRSP
Registered Retirement Savings Plan. Deductible contributions, tax-sheltered growth, and taxable withdrawals. Read more about RRSP
RRSP deduction limit
Your RRSP room: generally 18% of the previous year's earned income up to the annual limit ($33,810 for 2026), plus unused room, less pension adjustments. Read more about RRSP deduction limit

S

Sign-up bonus
An incentive for opening an account or card, paid only if conditions such as deposits, spending or holding periods are met. Read more about Sign-up bonus

T

Tax bracket
A band of income taxed at one rate. Each rate applies only to the income inside its band. Read more about Tax bracket
Tax refund
Tax you paid during the year beyond what you owed, returned after you file. Read more about Tax refund
TFSA
Tax-Free Savings Account. Contributions aren't deductible; growth and withdrawals are tax-free; withdrawals restore room the next January 1. Read more about TFSA

W

Withholding tax
Tax deducted at source, from a paycheque or an RRSP withdrawal, as a prepayment toward what you owe. Read more about Withholding tax