Understanding Your Credit Card Apr
A Credit Article Contributed by Shafia Nuzhat
Annual Cost (Apr) of Your Credit Card!
You must have heard a lot about APR with respect to your credit card. What is APR? Annual percentage rate (APR) is the cost of credit as a yearly rate on credit. Many credit card plans charge different APRs for credit taken for different purposes such as, an APR for purchases, for cash advances, or for balance transfers. Sometimes an APR is lowered if the payment is made in advance or sometimes they may increase the APR if a payment is late. You can save lots on credit card if you understand APR.
Of course, as a good consumer you will still not use your card impulsively, just because its in your wallet. If you are a smart consumer you will comparison shop for credit, whether its for a home loan, an auto loan.
Checking Credit Card Apr - Costs and Terms
Its important for you to know the costs and terms of an apr credit card. It helps you save a lot when you compare the costs and terms of the cards and choose the one that best fits your spending and repayment habits. The cost you must consider includes: annual percentage rate (APR) for goods and services as well as for cash advances, the annual fee, and the grace period. Compare the cash-advance fees, late-payment charges, and over-the-limit fees too, to get a complete picture.
Apart from considering these costs, you must keep a record of your payments. How often do you need your card? ; And what's the average expenditure each time, and so on, Also repayments methods that you use helps you save your overall costs, when you answer questions like, Do you pay your outstanding balance in full each month? Or do you usually carry over a balance?
Understanding Credit Card Apr
When you are offered a credit card, you will be offered several interest rate plans for repayment. Most common rates plans that the credit card issuers offer are: variable-rate, fixed-rate, and tiered-rate plans. In case of a variable-rate plans, the interest rate is calculated according to a formula The fixed-rate plan is often tied to changes in another interest rate, also prone to changes over time.
You must make sure that your card issuer has notified you before the "fixed" interest rate is changed. If you notice a change, you have every right to question them about the change in the rate. The last type is the tiered-rate plan, which means that different rates apply to different levels of the outstanding balance (for example, 18% on balances of $1 - $1000; 19% on balances above $1000).
Deciding the Card That Best Suits Your Need
The two important factors you must consider when you apply for an apr credit card are the outstanding balance and the periodic rate. Also important in choosing a credit card, are the factors such as, the usage of your card, your payment methods and patterns. If you always pay your monthly bill partly then a card with a lower APR would be a better choice, on the other hand if you make full payments monthly, then a card with no annual fee and that offers a longer grace period would be the better choice for you.
