What is credit card APR? This is a common question that is often asked by those new to the credit game.
APR stands for the "annual percentage rate" which is the way of stating the rate at which you will pay in interest if you miss a payment, carry over a balance, take out a cash advance, or if you transfer one credit balance to another card. APR is the interest rate as a yearly rate.
Be aware that there are multiple types of APR. One credit card can possibly have several different APR's. Here are some of the different types of credit card APR
- Multiple APRs - Some cards come with an APR for purchases, another one for balance transfers, and still another for cash advances. Most of the time APRs for cash advances and balance transfers are going to be higher than those for purchases. (for example, 13% for purchases, 18% for balance transfers and 19% for cash advances).
- Tiered Credit Card APR - In this scenario interest rates are applied to the multiple different levels of the remaining balance that you have (for example you may have 14% on balances of $1-$500 and 18% on balances above $500).
- Penalty APR - This type of APR might get higher if you miss a payment or payments. For example, your card agreement may contain language like, "If your payment is received more than 14 days late more than one time in six months the penalty rate will be applied to your account."
- Introductory APR - This means that a different rate will be applied after an introductiod expires, normally 6 months to 1 year.
- Delayed APR - In this type of offering a different rate is applied in the future, after you've had your account for some time. For example, a card company might advertise that there is "zero interest until May of next year." Watch out for the higher APR that will be applied at that time. Sometimes it can be a major increase.
If you're account balance even a small carry over amount, just a small raise in APR can make a big difference. So be sure to read the details and compare as many plans as possible to assure that you find the card and rate that works best for you! Many websites offer online tools that allow you to compare credit card offers in one place.
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