What is the significance of availing cards with low... - Other Questions

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Questions » User Questions » Other » What is the significance of availing cards with low APR?

What is the significance of availing cards with low APR?

Answered on
Add to Favorites:

APR stands for the Annual Percentage Rate on a loan. It is the interest rate calculated not for a single month but the whole year. APR can be of two types, the nominal APR and the effective APR. The nominal APR calculates the simple interest rates for a year while the effective APR is calculated taking into account the fee and the compound interest rate across the year. Parameters like loan due, time period etc are taken in to consideration when calculating the APR percentage.

Benefits of low APR

Low APR stands to be beneficial for the customer, business as well as the economy in general. During a recession, lower APR`s will give support to the starting up of new business ventures. The other benefits can be summarized as follows-

1. Low APR`s save money. When the APR`s are low, customers get more attracted towards loans and might invest in major loans as they can save money by giving less interest.
2. Low APR`s reduce personal debt. When monthly repayments are done against a loan, a lower APR will mean a major part of the loan goes towards the payment of the principal loan amount while the debt keeps on decreasing.
3. It helps to tide over recession period. Whenever a economy gets hit by recession, the finance department of the central government starts to lower the interest rates. This helps in calculating lower APR`s on loan amounts. This attracts customers who can go for bigger investments with lower interest rates and have the chance to “pay less for more”.
4. Low APR`s help in starting up new businesses. Business loans are huge in amount. If the APR is high then so will the annual interest percentage calculated on the loan. This may discourage the young entrepreneur`s to set up their own business. This has an adverse effect on the economy. On the other hand lower APR`s will increase the profit earning capacity of the newer business ventures and build a stronger economy.
5. Low APR`s help in reviving a recessive economy and creates job opportunities with more and more new ventures

In countries like the US and UK, lenders are required to declare their APR rates before a deal on a loan is made. This gives the customers the opportunity to bargain for lower interest rates. A customer also gets the chance to compare the interest rates charged by different companies on a fixed amount. This is a major criterion when selecting a card for credit or applying for major loans.

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.
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
You could turn $150 into $300 with Cashback Match™. Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically.
For Excellent, Good Credit
No Annual Fee. See WebBank/Fingerhut Credit Account Terms.
For Bad Credit

Other Questions in
Other