Two Things to Understand About Credit Card Annual Percentage Rate

There is a lot of information provided in the materials that come with a credit card application or with a new card, including details of the credit card annual percentage rate. However, the numbers provided can sometimes be confusing, and it can be difficult to understand how the rate impacts the actual payments on the card and the amount that cardholders are charged. Because of this, it’s important for card holders to take some time to understand two very important things about interest. Get a great credit card with 0% interest at DontSpendMore.com

First, interest rates can vary even on the same card; and second, that penalty charges can affect the APR.

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Interest rates can vary

The first thing card holders need to understand about credit card annual percentage rate is that it can vary a great deal from the percentage rate that is actually charged on different items charged on the card. This is because some items may be purchased under special introductory rates or other offers, but it could also be because doing things like taking a cash advance on a card is subject to higher rates.

There may also be different interest rates charged for balance transfers. It’s important to understand this when looking for the right card because some cards charge vastly different rates for some things.

Late payments and other charges

The second thing to know is that if a payment is late, or sometimes at the discretion of the issuing bank, the interest rate can be changed. It is not unusual these days for a cardholder to open up the statement and find that the credit card annual percentage rate has been increased by the issuing bank, even though the holder has made every payment on time. This can happen when the lender does a periodic review of its account holders and finds negative credit information on the holder’s credit report.  It can also happen if a credit holder reached the limit.

However, even outside of these extreme events, cardholders can find themselves with an increased credit card annual percentage rate for various reasons including late payments.

But, the real reason to understand annual percentage rate on a card it so that cardholders can select and apply only for those cards that have the best deals. It’s very common for cards to offer a very low introductory rate that is becomes very high later on, but a savvy cardholder can use the low interest rate time to buy large items and then pay them off before the higher interest rate takes effect. In this way, card holders can save themselves a lot of money in interest charges.

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