Bill Consolidation Loan

Who Wants a Low APR Credit Card?

When used properly, a low APR credit card can be a great financial help. When used unwisely, it can be a drain on your budget. If you are unable to pay off the entire credit card balance at the end of the month, then a credit card with a low APR is essential.

APR is an abbreviation for “Annual Percentage Rate”. Simply put, it is the total cost of credit expressed as a yearly interest rate. That means, it adds all the “miscellaneous” charges in with the interest rate to give you the complete interest charge you can expect to pay.

APR rates are good because it allows you to compare credit card offers. It puts all the costs you pay for a credit card at your fingertips. It should eliminate any surprise charges. For example, some companies advertise a very low interest rate. However, if you read the fine print, they will charge additional fees. An annual fee is an example. By the time you add in the additional fees, that low interest rate isn’t so low.

The APR is usually calculated each month based on what you still owe on the credit card. The interest charge is calculated as if the current balance will be the same for the next twelve months. The total interest is divided by 12 to determine the current monthly charge. When looking for a credit card, always get an APR rate before signing any agreement.

Here’s the main point. Always get the lowest APR credit card you can. Shop around. Compare APR rates. Don’t simply pick the first credit card offer you come across.

Why choose a low APR credit card?

How much interest you pay on your credit card depends on the APR.  The lower your credit card balance, the less interest you will have to pay. Whenever possible, pay down the balance of your credit card as much as possible. Don’t just continue paying the minimum amount.

You should also read the fine print. Low Credit Card APR’s can be fixed or variable. Make sure you understand any credit card agreement before you sign.

You can find many low APR credit card offers online. Online is a good place to start looking for credit cards. However, there are many different types of credit card offers. Each company uses their own factors to determine what rate to offer you.

Make sure you ask a lot of questions. You need to know if the APR is a fixed rate or a variable rate. Fixed rates are better because your payments don’t change too much. Variable rates change how much you have to pay. If it goes down, that’s great. However, if it goes up it can ruin your budget. Try to get a fixed rate APR.

Ask if there are any other charges. Some companies offer optional payment protection plans. If you don’t tell them no, you will pay more money. Other companies charge an annual fee. Avoid those companies. An annual fee simply means you pay more money.

When looking for a low APR credit card, be aware that you can get some very good initial offers. For example, almost all low APR credit card offers 0% APR for the first six to twelve months on purchases, cash advances, and balance transfers. Other credit cards allow you to accumulate rewards or rebates from the items you purchase. Some companies offer $0 liability on unauthorized purchases, and no annual fees.

Some credit cards offer special discounts on items you purchase. For example, a 5% rebate on gas and up to 1% on everything else. Still others offer good deals if you have high balances on other credit cards. They will allow you to transfer those balances to their credit card for no cost. In addition, you pay no interest for several months. This is really a good deal if you work to pay down your balance.

As mentioned earlier, a credit card can be useful and convenient… as long as you use it properly. Use your credit card to build a good credit history by making your payments on time every month. After the initial introductory period, you will have to pay interest. Take advantage of those special introductory offers. After all, that’s the reason you applied for a low APR credit card in the first place. If you do your homework, there won’t be any surprises.