Credit cards give you the ability to buy items on credit. When you pay your card bills, you are paying for the cost of the item plus an interest. The interest that you pay depends on the card’s APR so it is important to know what APR or Annual Percentage Rate is.
APR is simply the interest rate of the card. APR differs from bank to bank and from customer to customer. The biggest single factor that determines APR is your credit worthiness. A customer who is a prompt and responsible payer may get a lower APR, an increase in credit limits, or even a zero interest credit card.
As a consequence of not being able to pay your bills promptly, banks may compound the interest of your charges factoring in late charges and other penalties. Although APR is an annual rate, it may go up anytime especially if you are consistently missing out on payments. Not paying bills on time and defaulting on payments are the two most important reasons why banks give high APRs
APR is a reflection of your ability to pay bills and other card dues and can range widely from as low as 3% up to 21%. Responsible card holders get lower APRs. In order not to be charged with high interest rates, it is important to act responsibly and pay bills promptly. Those who excel in maintaining a good credit history become preferred customers and may be rewarded with a zero APR.
Before getting a credit card, always find out its APR. If you are capable of paying more than what your statement is requiring you, do it so that your outstanding charges will go down quickly. A 500 dollar debt will become 1000 dollars if paid out slowly. Of course, this is how banks would like it to happen. By paying more than the requested amount, that 500 dollars will go to your savings.
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