Compare Credit Cards Rates
How To Compare Credit Cards Rates By Understanding The APR
Always compare credit cards rates if you want the best credit cards. You will see lots of credit cards offers, and they all advertise the best features and benefits as if they are the only one offering them. The truth is most credit cards carry the same basic features with only minor differences.
What is common to all cards, though, is the APR, and it pays to understand what it is and how it works if you hope to get the top credit cards rates.
What is APR?
It's the "Annual Percentage Rate" or the interest you pay to the credit card company, stated as a percentage, in exchange for being able to use their card and borrow the amount of your purchases.
How To Compare Credit Cards RatesYou need to understand the APR to compare credit cards rates. That's because the APR can dramatically affect your chances of paying off your card if you maintain a large balance. If the APR is high and your balance is high, you will have a difficult time making any headway since your monthly payments might only be covering the interest costs.
The APR cannot only differ depending on the type of card you have, but it can also change depending on the type of item you are charging. For instance, on some credit cards the highest APR is applied to cash advances. However, the APR charged on purchases often comes a close second.
For instance, the APR on a $150.00 cash advance might be as high as 22% or more, which is a lot of interest to pay considering the small amount of cash obtained. On regular purchases the APR might be somewhat lower, perhaps around 18%, but this is still a significant amount of interest to pay.
It's always better to use your card only in case of an emergency when you are short of cash, or when you can afford to pay the balances off each month -- the best way to handle monthly payments.
The size of your unpaid balance could also determine the card's APR. A "tiered APR" is set by the balance tier your account has reached for that month. If your balance is $0 to $2000, you might be charged a 14% APR, whereas a balance greater than $2000 might have an 18% APR. With a tiered APR you should always maintain lower balances to avoid paying higher interest charges.
If your minimum payments are not made as required, you can be subject to a "penalty APR" of 5% or more on your entire balance. For example, one of the top credit card companies states in its fine print: "The increased rate comes into effect if the minimum payment is not made as required, 2 times consecutively or 3 times during any 12 month period."
The best strategy to avoid a penalty APR is to NEVER miss a monthly payment.
How To Use Credit Cards With Low APR To Your Best AdvantageYou will often see an "introductory APR" advertised in some credit cards offers. On transferred balances and purchases this interest rate is considerably less than standard rates, but it is seldom in effect for more than 12 months -- sometimes it's only for 6 months. These are the best credit card rates you are likely to come across, and they can be anything from 1.9% to 1%, and sometimes even 0%.
Credit cards with low APR can be used to your advantage if you currently have a large balance at a high APR on your present card. By transferring your balance to the low APR credit card, you could pay down some of that balance or cancel it completely during the introductory period when the top credit cards rate is still in effect.
You need to be aware, however, that the future APR (or delayed APR) begins the moment the low introductory APR expires. Future APR can be considerably higher than the introductory rate offered by the company.
To avoid getting caught by the significant increase at the end of the introductory APR, some card holders have successfully transferred their remaining balance to yet another card company that offers a similar introductory APR. By using this tactic you can continue to get the top credit cards rates until the balance is successfully paid off. But, always be sure to read the fine print as there could be cancellation fees or penalties involved.
Also be aware that while the lower introductory APR is in effect for the stated period, it could end abruptly if you should miss even one of the minimum payments. Be sure to read the fine print on the credit card application to avoid any surprises, and NEVER miss a monthly payment if you hope to continue receiving the cheap credit cards rates.
Low Credit Card Interest RatesFinally, always compare credit cards rates when shopping for the best credit cards. Getting the lowest interest rates is vitally important for any debt reduction strategy.
Always read the fine print on the application and know for sure what annual interest rate will come into play for the card you are looking at. Ignorance is no excuse; it can cost you hard-earned money.
After comparing low interest credit card rates, choose knowledgeably and don't be sidetracked by any advertised features that make the offer seem to good to be true. Always compare credit cards rates first, then the features.
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