What Is Apr And How It Works
What does APR stand for and How Credit Card APR works - APR Explained
Although we know what a credit card is and we are all experts in using credit cards to rack up huge bills, very few of us feel it is important to question what an APR is. There are many people who have been using credit cards for years without giving much thought to APR and do not realise the significance of shopping for the Lowest APR credit cards.
APR or Annual Percentage Rate is the effective interest rate applicable to a credit card which decides the rate of interest that is payable on the outstanding balances. APRs work in a similar concept to the interest rate of a personal loan which is widely understood and applied.
For instance, 6% annual interest rate on a personal loan may imply that on borrowing $/£1000, the borrower has to pay 6% of that amount per year as a charge of borrowing. In this case it will be, $/£60 (1000 x 6/100=60) and the interest payable per month will be $/£5 (60/12=5).
APR on a credit card works in a very similar way; however, the rate can be much higher in some cases ranging between 14% to 40% or more depending on the credit card provider.
The trick is to find the Lowest APR Credit Cards and compare credit card deals to ensure the applicable Annual Percentage Rate (APR) is manageable. This will make repayment of the outstanding balances easier and cheaper. Higher APR means you end up paying a large amount of interest every month which does not help reduce the debt on the credit card at all. So the lower the APR the better!
One thing to look out for, however, is that lower APR credit cards may have higher credit score requirements. As a result, a person with an average credit rating might not be able to get the lowest APR offers in the current market. Having said that, Credit Card Comparison websites can be very useful in this case to find the Lowest APR Credit Cards along with the most suitable credit score requirements for your lifestyle. It is strongly recommended that no stones are left unturned when shopping for the right card to suit your needs.
