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Credit Card Applications » Questions » User Questions » Other » What is low APR and what are the disadvantages of a card with Low APR?

What is low APR and what are the disadvantages of a card with Low APR?

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APR or Annual Percentage Rate in credit card terminology means the rate of interest applied by the credit card companies to the total outstanding balance due, if the bill is not paid in full at the end of billing cycle, or the payment on the card is delayed. This amount after the calculation is added to the total outstanding balance at the end of every month.

Low APR credit cards are cards that have lowest interest rates that are applied for missed or delayed payments. The first thing to be cautious about the low APR cards is the fact that the low interest rates might be only for an introductory time period. It can range anywhere from 6 months to 2 years. When the low APR period is over, the credit card companies might charge even higher interest rates than normal, to make up for the low interest period.

Another thing to consider before opting for a low apr credit card is the annual fee charged, if any. Usually the cards that are charged the annual fee will not have the introductory period, the low interest rates will be for lifetime. These cards are beneficial only if the annual fee is a small amount and the rate of interests are really low. Otherwise, the savings made by the low interest rates will be lost in paying the annual fee.

Reward schemes are another thing to note before signing up for a low APR credit card. Usually, credit card companies will not offer very attractive reward schemes for low APR cards. If they do, they will charge an annual fee for the card. So, the question here is whether the card is really worth the annual fee, for what it offers.

Some credit card companies will offer low APR on conditional basis. For example, if the customer has a neat track record of timely payments and good credit score, then the customer can avail the low APR. But if more than one payment is missed or the bill is not paid in full number of times, the low APR rates may be revoked along with applying a fine for late payment.

Low APR cards definitely help saving money, and in a financial crisis, will help save money if one or two bill payments are missed. But the cards come with many applied conditions and clauses, and people must read through all of those with caution before applying.

All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.
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