credit card rates and aprs
What’s the thing that is most prominent on any credit card ad?
Well, it’s the credit card rate (or the APR, as we know it). The credit card rate is the most publicized thing in the world of credit cards.
A lot of people just compare the credit card rate of various credit cards and just go for the one that is offering the lowest credit card rate (or APR).
Credit card rates are, in fact, one of the most important factors in the selection of a credit card (though not the only factor). Therefore, a proper understanding of credit card rates is even more necessary.
So, what is a credit card rate or APR?
Very simply, credit card rate is the rate of interest that the credit card supplier will charge you with on the amount you owe them. The credit card supplier will charge you an interest only if you don’t make full payments in time.
Annual percentage rate (APR) is an expression of the effective interest rate that the borrower will pay on a loan, taking into account one-time fees and standardizing the way the rate is expressed.
In other words the APR is the total cost of credit to the consumer, expressed as an annual percentage of the amount of credit granted. APR is intended to make it easier to compare lenders and loan options.
When you receive your credit card bill, it specifies the full amount you owe the credit card supplier. It also specifies the minimum payment that you must make (by a particular date), in order to avoid incurring a late fee and other inconvenience.
You have the option of making either a full payment or just the minimum payment. If you make a full payment (by the due date), you are not charged any interest.
However, if you decide to go with the minimum payment or some amount that is lesser than the full amount, the credit card supplier will charge interest based on the credit card rate and the balance amount.
This credit card rate is the interest rate that you agreed with them at the time of applying for the credit card. The credit card rate or the annual percentage rate, as is obvious, is an annual interest rate.
The credit card suppliers use this annual credit card rate to calculate the monthly credit card rate and then they calculate the interest on the balance amount that you owe them.
The balance amount here is simply = Full amount – (payment made by you). This interest is added to your balance for the next month (at the time of next billing cycle).
If you again make a partial payment, the new balance is calculated again and the credit card rate (monthly one) applied to it for calculation of new interest; and it keeps going on and on until you make the full payment.
That’s how credit card rate acts in this vicious circle. So, credit card rate is termed as the most important consideration in choosing a credit card.
Low APR Credit Cards – Selecting the Best
Hunting for and selecting the very best low APR credit cards has become easier with the advent of the Internet where you can do easy comparisons
(from the various options available to you at the click of a mouse) as to which low APR credit card will be the best for your needs.
Simply put, low APR credit cards charge you an interest rate even lower than the standard APR offered by most traditional credit cards.
The lower the interest rate or APR, the cheaper the card is to carry and the more money you’ll save on it. Easy enough, right?
So if you carry a large monthly card balance, a low APR credit card could be very beneficial for you. In some cases, low rate credit cards can help cardholders save a lot of money. But what’s an APR anyway?
The Rationale of Low APR Credit Cards
The Annual Percentage Rate (APR) is the cost of credit; it is the amount of interest rate that is chargeable to any outstanding balance on a credit card.
If you don’t make the full payment within the grace period certified by the credit card company, the card issuer has the right to charge you an interest rate for the service, a fee known as the APR.
For a credit card to be considered a “cheap” credit card it should have a low APR.
With a low APR credit card, there is always fine print in the terms and conditions to take note of. Commonly, consumers fail to read the fine print that might include the following:
1) Annual Fees: Many low APR credit card offers might provide a low interest rate or APR but require you to pay a substantial annual fee.
If the effective interest rate (after counting the annual fee) is indeed higher than the actual rate, then this credit card is obviously masked in the garb of a low APR credit card.
2) Low Introductory Rates: Credit card companies know that low introductory rates are a great incentive. So when suddenly, the initial period ends,
and your monthly minimum payment increases dramatically, you know something definitely smells fishy. Check it before you fall prey.
3) High Balance Transfer Fees: Another trick in the trade is that some amongst the low APR credit card fraternity offer low balance transfer rates that come with a high balance transfer fee (which would be mentioned in the fine print).
The moral of this story: Read and re-read the fine print associated with any low APR credit card before you apply.
Want Low Rate Credit Cards?
Follow these simple steps:
-Call the institutions in which you already have a bank account or credit card account. Discuss with them the possibility of converting your existing account to a low rate account.
-If your existing credit card company cannot provide this request, seek out an offer and a card issuer that does.
-Get in touch with the companies you are interested in applying for low rate credit cards. They might be able to provide information about existing card offers that you might not be aware of.
-Fill out the card application and return as per the instructions. Make a follow-up call to the credit card company if you have not heard from them within the next 10 to 15 business days.
-You have the right to obtain an explanation if the credit card company has turned down your application. The denial letter must explain how you can obtain your credit report.
Keep in mind, however, that credit card issuers reserve the lowest possible interest rate offers for customers with the strongest credit histories, so maintain a good credit history is essential when trying to secure all types of low APR credit cards.
0% APR Credit Cards – What You Need to Know
0% APR credit cards are an appealing option for frequent shoppers that rely on having a low monthly interest rate when they cannot pay off the entire balance of the credit card in any month.
But what you really need to know about 0% APR credit card offers, often times is never discussed.
For starters, the APR is the commonly-used acronym for “Annual Percentage Rate,” which is the annual month-to-month rate that you can expect to get for your credit card balance.
Naturally, if you frequently carry your credit card balance over from month-to-month, it is important for you to have a low or even 0% APR credit card.
How it Works
Every credit card company makes money when shoppers use the card, but do not pay off the balance at the end of each month.
Because the credit card company has lent shoppers money so that they can make their purchases, the credit card company will charge interest on the balance until the entire balance is paid off.
The credit card company has the potential to make a generous profit from the balances of their customers each month.
Naturally, as a consumer, having a 0% APR credit card means that your balance is carried over from month-to-month without any charges applied.
Beware of High Interest Rates
It may seem like credit cards actually lose money by investing in a 0% APR credit card promotion. However, the 0% APR credit cards actually help credit card companies find customers.
For example, if there is a shopper that has a high APR (some are up to 20%) and he or she is having a hard time paying down the balance of the credit card,
the purchaser is in an ideal situation to transfer their balance to a 0% APR credit card for a period in which they can focus on working down their debt.
The situation is ideal for someone who is in short-term debt. However, to balance the 0% APR credit cards against the credit card company’s need to make a profit, as soon as a trial period expires,
many credit card companies will increase their rates drastically. As a consumer, you need to read the fine print so that you are aware of the deadlines associated with this change-over.
Where to Find a 0% APR Credit Card
It may seem harder than it really is to find a 0% APR credit card. It’s advantageous to find a card that doesn’t require you to pay a month-to-month rate on the unpaid balance.
However, credit card companies frequently enact 0% APR credit card promotional deals, so take a look around for what deals are available to you currently.
0% APR credit cards can make managing your debt very easy. While most of them do not require annual fees, it is important for you to understand what you are agreeing to before you sign a contact with a company.
While most 0% APR credit cards eventually increase the rate after a set period of time, the duration of the promotional period varies by company.
As with any credit card agreement, a little research and education into the details of a 0% APR credit card can go a long way towards helping you make a decision that can positively effect your finances. Choose wisely!
0% Apr Credit Cards: A Smart Way To Save
With the plethora of credit card options available today, you can use plastic to pay off debt and save money. Using a credit card to get rid of debt, rather than rack it up, may sound strange.
But it is possible with 0% APR credit cards. All of the major credit card companies offer 0% APR credit cards. They are a great way to save hundreds, even thousands, of dollars on interest.
If you use them wisely, 0% APR credit cards will help you get one step ahead in the credit card world.
What 0% APR Credit Cards Are
APR stands for the annual percentage rate on your credit card. When credit card companies advertise 0% APR, they are giving you the chance to carry a balance on your card and not pay interest on it.
The timeframe for this 0% APR is usually between six months and a year.
Some credit cards only include 0% APR on new purchases. Others offer the 0% interest rate for purchases and balance transfers.
With the balance transfer option, you can shift the amount that you owe on a card with a high interest rate to the 0% APR credit card. If you pay off the balance within the introductory period, you will avoid paying high fees in interest.
The savings you’ll receive from a 0% APR credit card can add up fast. Let’s say you carry a balance of $2,000 on a credit card for a full year.
If the interest rate is 20%, you will have to pay $400 in interest. This would not be the case with a 0% APR credit card. If the 0% introductory period is twelve months, you will avoid paying $400 in interest. That’s a significant savings!
Read the Fine Print
While 0% APR credit cards offer a great way to pay off debts and save on interest, it is important to understand the details involved. Some companies issue the introductory period based on your credit score.
If you have good to excellent credit, you will receive a longer introductory period than if you do not have outstanding credit. Keep in mind, however, that there will still be an end to the introductory period.
This is why it is also essential to look into the “go to” rate. This refers to the APR that will go into effect after the 0% APR introductory offer.
This “go to” rate is often higher than other credit card offers. If you check into this before applying for a 0% APR credit card, you will know what is in store for you after the initial grace period.
There are sometimes additional fees involved with 0% APR credit cards. They may charge a certain amount to transfer balances on to the card.
Also, the interest rate may be raised if you miss a payment. Some 0% APR credit cards are only available to those with good credit. If you have poor credit, you may be better off with a different credit card.
If you want to pay off some debt or make a large purchase, it is time to look into a 0% APR credit card. You can use the introductory period to pay off balances.
Then take the money you’ll save on interest expense and use it for other purchases. Apply today for a 0% APR credit card and start saving.
Credit Cards and APRs
You probably see a lot of credit card offers on a daily basis whether it’s on television, the internet, a magazine or in the mail.
In the advertisement, you probably see or hear APR mentioned several times in the form of Introductory APR, Standard APR, Cash Advance APR, Balance Transfer APR and Default APR.
The differences between these APRs might be confusing at first but they are pretty simple to understand.
Introductory APR refers to the initial interest rate you receive for purchases on the credit card when you first get it. This Introductory APR is usually really low (around 0%) and lasts between 6 and 12 months.
Standard APR is the interest rate the credit card goes up to after the Introductory APR period is over.
Cash Advance APR is the interest rate you receive for cash advances.
Balance Transfer APR is the interest rate you receive for any credit card balance you transfer over to your new credit card.
As a side note, if you have a high interest rate credit card and the new credit card company’s Balance Transfer APR is lower than your present credit card‘s interest rate or if they offer the Introductory APR for balance transfers,
transfer your balance to the new credit card if you can pay the balance off within the Introductory APR period.
Default APR is the interest rate your card goes up to if you are late on payments or go over your credit limit.
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