Most of us know the meaning of low APR, however of those who are not familiar we shall guide them through. While shopping for any form of credit, one will surely come across the term called APR or “annual percentage rate”. The Lending Act states that all credit providers must state this rate on their credit products being offered. It is extremely essential to get a better understanding of APR in order to make an informed decision while choosing the card that is most affordable, to suit the individual needs.
The significance of low APR credit cards:
The annual percentage rate refers to the cost of using the card, which is determined by the percentage rates, per annum. This figure helps us, in making comparisons with other credit cards, as all cards calculate the APR`s annually. Interest rates may be calculated daily, monthly or annually. The annual percentage rate is not inclusive of option fees such as those that are paid for using the ATM facility, cash advance, balance transfers, and or late payments. This is a essential way of viewing the cost of taking credit, and then making a decision.
The finance charges as well as APR in the card:
While receiving the monthly credit card statement, there are two figures that are mentioned. The first is the monthly, or the everyday charges, that are mentioned in the periodic table, and the other figure, is the APR. The monthly periodic rate is calculated on the card by dividing the APR by 12. This figure is then multiplied by the average everyday balance over a period of one month and then the finance charges are calculated. If there is a daily periodic rate, then the APR is divided by 365 by the card company. This figure is then multiplied by the average daily balance, as well as the days in billing cycles, to arrive at the finance charges.
The normal practice for card companies is to attract customers with low APR credit card offers. This form of attraction will typically include 0% APR grace periods, where one can work on the debts and try paying it off without the high interest rates. However, any delayed payment, even by a day, could cost an introductory offer on APR. So it`s recommended to familiarize oneself with the fine print, before choosing the card.