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Credit cards come with all kinds of offers meant to promote them and attract more and more customers to use them. However, one of the most important features of a credit card is the APR or annual percentage rate. This is the single most important figure that a customer looking to accept a new credit card must pay attention to. This figure will tell a lot about whether the credit card is trustworthy and whether it will help the customer make some savings or whether it is a credit card best left alone.
The APR is the interest rate a customer must pay on the outstanding balance or payment due on the card after the payment date is past. This is generally divided by 12 to find out what the monthly payment is. If this interest rate is low, that means that the interest a customer has to pay on outstanding balances will be less while a higher APR obviously means more interest. The interest rate depends a lot on the creditworthiness of the customer as well, determined by his or her credit score. A higher credit score means a more trustworthy customer who represents less risk to the credit card company. Hence the APR offered is usually lower than that in case of high risk customers who have records of defaulting on payments in the past.
Some credit card companies, in order to attract other card users, offer variable APR. This means that the APR for balance transfers changes after sometime as per the terms and conditions. This means that there is an initial term period when the APR has one value and it is increased to another number after the initial term period is over. Often the APR is 0 during the initial term period and then goes up to around 13 -14% after the term period. Customers should be wary of the changing APR, as a higher APR later could prove to be highly uncomfortable. Those with high debt can avail this for their benefit though, by paying off the debts before the initial period is over without worrying about any interest mounting on the balance.
Some credit cards have mixed offers too. They offer one rate for balance transfers and another for normal purchases. Also, the initial term period could be varied, so that for balance transfers the APR may be 0 for 12 months while it may be 0 for purchases only for the first 6 months.