Significance of APR on a Credit Card
When deciding which card to use, the APR, or annual % rate plays an important factor. In fact, it’s usually the first thing advertised on a credit card application and is indeed the first thing the consumer is looking for. Often a consumer will select a Visa card based on this info alone. And for excellent reasons as paying a higher rate of interest means extra cash out of your pocket.
There is something to say here. The APR only applies when you carry a balance. Carrying a balance means not paying it in full every month. If you pay your card off every month, you won’t be paying any interest on it. You may just be paying the amount you used. So, if you’re never planning to carry a balance, maybe APR isn’t as important to you.
If , however , you choose to pay less than the full balance, you will now be subject to that APR on the leftover balance that you did not pay off. So, the month after next you will get a bill for that remand + the interest you owe for one month + any other charges you have made after that. If you choose not to pay the balance off in full again the month after next, you may then have another months interest charged onto that balance and so on .
If this sounds more like the way you pay your cards, you’ll want to find ones that offer the lowest APR you can get. Be ware of teaser rates, or introductory rates. They may offer something really low for a the initial few months and then increase it after that. This info must be revealed to you when making an application for the card, even though it may be listed in the fine print. Be sure the increased rate is less than what you are finding from other firms. Though, if you are attempting to do a balance transfer and can get your balance paid off before that 1st rate expires, it might be a smart idea to get a card like that. Then, you can exploit a very low IR while you pay off your debt.
The neatest thing to keep in mind with APR’s is to make them work for you. Avoid charging what you do not want and what you aren’t able to pay off right away. This will keep you from paying interest. In fact, you should generally try and pay everything in full each month, unless of course you are making an attempt to build credit. Then, just carry small balances and make timely payments.
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