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Credit cards have become a way of life. They help make payments cashless, convenient and safe. But do you think having more than 2 credit cards will help you resolve financial problems? Credit cards should be seen as a loan that needs to be paid off at the months’ end. Credit cards are not alternative sources of income, and require cardholders to pay outstanding balances on a monthly basis to avoid paying more money for late payments. Keeping these basic rules in mind, let us reason out why you need a credit card with low annual percentage rate (APR).

What is annual percentage rate anyway?

Annual percentage rate (APR) is the interest you pay in a year for holding a credit card. It is important to find a credit card that has 0 or low APR. If you do not pay your full outstanding balance at the end of a month, the APR charged on your credit card will determine the extra money you would pay to the bank. Depending on your previous credit history, you will get a credit card with high APR (for bad credit history) or low APR (for good credit history).

Since APRs vary widely for each type of credit, sift through the fine print to avoid signing up for credit card that is not economical. Find out if your credit card charges a fixed or variable interest. A fixed interest rate credit card is suitable for those who are not regularly updated about fluctuations in interest rates. A variable APR may suit those who are more confident about their financial prowess and who regularly follow the interest rates in business section of newspapers.

If you have managed to find a credit card with low APR, check the fine print on the following parameters as well.

The APR after the expiry of the introductory phase

Most of the credit card companies charges between 11 to 25% APR after the completion of the introductory period.

Interest charged on balance transfer during introductory phase and afterwards

In order to attract more customers, companies charge 0% APR on balance transfers during an introductory phase (which may vary from 12 to 24 months for different credit cards). So find out when the introductory phase ends for your credit card. Choose a card which charges no transaction fee for balance transfer.