A Guide to APR on Credit Card
Annual percentage rate or commonly known as APR is the interest rate that is being charged on a credit cards, depending upon the amount of purchase made by you, or amount borrowed by you. You also need to pay interest, if you forgot to pay the bill and the balance is carried forward to the next bill. Balance transfer from one card to another is also eligible for APR.
Usually the annual percentage rate charged on the balance is calculated in compound form. In simple words the total amount in your credit card if not paid in the particular month, will be greater the next month due to the addition of interest in it. Even if the amount charged as interest is not paid, then in the preceding month as penalty, fees will also be added along with the APR. Usually the APR calculated by the banks vary, ranging from 3 percent to 30 percent, this is the reason that you must read the rules laid by the bank before opting a credit card for yourself. If you have a good credit rating that there is a chance that bank will offer card with a low APR than the person with a poor credit history.
Apr credit card rate may vary from bank to bank, some charge a lower rate of APR on purchase, whereas a higher APR on balance transfer as well as cash advances. Some credit cards also charge interest rate depending on the balance amount. For example they have a fixed percentage of interest if the balance ranges from 100 to 1000 and a higher rate of interest if the balance is more that thousand. This type of charging interest is known as tiered credit card APR. Penalty APR is the common type of interest, here the bank provides a fixed date to you for the payment of the bill, if the date known due date is missed then the penalty is applied, on the total amount due. The rate of interest in this scenario is higher and might pinch your pocket.
APR credit card can be changed by the bank at any point of time with a specific number of days notice to its customers. Here are few points that you must check before opting for a credit card.
1. You must always check the rate of interest that the bank is going to charge once the introductory date expires. Usually banks offer a lower rate of interest to their customers when they are new and after a limited period of time the rate of interest is changed which is comparatively higher.
2. Default rate of interest is applicable, whenever you fail to make the payment. You must also enquire the difference in the annual percentage rate during introductory period and after the period gets over.
You can know about different credit cards either through the banks or you can easily compare them with the help of online tools that are readily available and select the best one for you.
Apr credit card rate may vary from bank to bank, some charge a lower rate of APR on purchase, whereas a higher APR on balance transfer as well as cash advances. Credit card debt can be overwhelming.
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