Credit Card APR: What You Should Know

By deSita Anwarhee

Credit Card APR. Governments and the Financial Regulators recognize that for most people to understand and compare between different financial products such as credit cards are very complicated. Therefore they put in some precautions to protect consumers and to make certain they have some standard information to compare different credit card interest rates and other associated charges.

The Credit Card APR that stands for Annual Percentage Rate is the interest amount a customer will pay annually. It attempts to make a single figure of interest and finance charges so the consumer can make a comparison like with like. APR differs from credit card to credit card, sometimes it’s fixed, and sometimes it changes from month to month. But if you pay the bill in full every month then there will not be an APR fee applied.

People with good credit are typically offered credit cards with low APR. People with poor credit will have much higher APRs. Rates will vary from 3 percent for good credit customers and up to 21 percent for people with poor credit.

However, most credit card companies compound interest rates. This means that your credit card fees will be higher than just this straight interest charge, particularly if you carry a balance on your cards. If you have a balance you will also be charged interest on any interest charges that are not paid from the preceding month.

Some companies might change your credit card APR if you fail to make payments, or they may decide the APR based on your current credit history. Some credit card companies have an introductory rate for their APR, and after so many months this rate may go up dramatically.

It is significant to read fine print for each card because terms and APR is different for each card. If a credit card company charges a fixed rate that means that your credit card APR may change, but the company is required to give you notification of a specific number of days.

If a credit card company offers a variable interest rate, this means that your interest rates will change according to interest rates generally. They may change from time to time. It is most likely attached to another interest rate, such as the prime rate. If the prime rate changes your credit card rate may change also.

Always check what the APR is of any credit card you are considering. The credit card APR directly impacts on how expensive it will be to carry a balance on a credit card. You’ll be able to save money in the long-term by recognizing exactly what you’re receiving from the credit card provider.

Chek out our other credit card guide on Bad Credit Credit Cards.

Tags: annual percentage rate, fixed apr credit card, low credit card apr

This entry was posted on Saturday, February 14th, 2009 at 6:36 am and is filed under Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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