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Since
we all know that there are virtually as many different
credit card companies as there are stars in the sky, finding
the one that works best for you and your needs can be a bit
tricky. All credit card offers will come complete with a
list of features that are supposedly exclusive to that card.
In actuality, most of the cards offer about the same set of
features with a slight variation. All will mention the APR
and knowing what and how that works is vital.
APR stands for "Annual Percentage Rate". It is the amount of
money that you will pay, expressed as a percentage, for the
privilege of charging purchases and carrying a balance.
The All Important APR
This is a biggie. The APR can drastically change your
ability to pay off your card, particularly if you carry a
balance. The APR attached to the credit card can vary not
just from card to card but also from how and what you
purchase.
If you are looking to obtain a cash advance on your card, be
aware that the APR here will usually be the highest. The APR
for purchases is usually right on it's tail, though. For
example, for a cash advance of $200.00 the APR may be as
high as 23%. This is a whopping amount of interest to pay on
a relatively small amount of money. For purchases, however,
the APR may be more like 19%. Still pretty high for the
convenience of not using cash. That's why it's usually best
to use credit cards for emergencies or for purchases that
you intend to pay for in full at the end of the month.
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Credit Card Information
»Credit Card
Information
»Types
of Credit Cards I
»Types
of Credit Cards II
»Various
Features
»APR
Explained
»Choosing
a Credit Card
»Credit History
»What
is a Credit Report
»Credit
Card Numbers
»Expiration
Date
»Application
Process
What to do When...
»Your
Credit Card is Stolen
»Your
Application was rejected
»You
Have no Credit History
»You have Credit
Card Debt
»You have to pay your bill
Business Owners Section
»How
Credit Cards are Processed
»Accepting
payments online
»Accepting
payments offline
»Protecting
Your Business From Fraud |
APR's can also vary according
to how much of a balance you carry on your card. These are
called tired APR's because the APR depends upon which
balance tier you are at on any given month. For example, a
balance of $0-$2,000 may be subject to an APR of 14% while a
balance of more than $2,000 has an interest rate of 18%.
Again, it pays to keep your balance lower on these types of
cards.
Then there's the penalty APR. This happens when you make
late payments regularly (meaning more than once in credit
card lingo). Your APR can be raised and will affect your
entire balance. Moral: Make your payments on time.
The most popular marketing tool used today by the card
companies is the introductory APR. This is a significantly
lower interest rate on transferred balances and purchases
made during the said introductory period. This is beneficial
if you carry a high balance on another card at a high APR
and can transfer your balance, giving you the opportunity to
put more of a dent in that balance during the intro period.
One thing to look out for, though, is the future APR (or
delayed APR) that kicks in when the lower rate expires. This
rate can be significantly higher than the intro rate they
are offering.
So remember, pay attention to the APR and know what rate
will come into play for the card you are looking at. Make
your choice wisely and be cautious!♦
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