by Alex Russell
What's the thing that is most prominent on any credit card ad? Well, it's the credit card rate (or the APR, as we know it). The credit card rate is the most publicized thing in the world of credit cards. A lot of people just compare the credit card rate of various credit cards and just go for the one that is offering the lowest credit card rate (or APR).
APR is undoubtedly an important factor when it comes to picking a credit card, but it is definitely not the only thing to be aware of when selecting a card.
The question arises, what is APR? Simply put, this is the interest which the company you have the credit card with charges on top of what you owe them. If you pay the debt in full, you don't pay interest.
When you get the credit card bill, it will tell you the amount which you owe to the card company. It will also tell you the smallest payment you can make and a date by which to pay it. You choose whether to pay the full amount or to only pay the minimum payment required.
If you make a full payment (by the due date), you are not charged any interest. However, if you decide to go with the minimum payment or some amount that is lesser than the full amount, the credit card supplier will charge interest based on the credit card rate and the balance amount. This credit card rate is the interest rate that you agreed with them at the time of applying for the credit card. The credit card rate or the annual percentage rate, as is obvious, is an annual interest rate.
The card companies use the APR to work out the monthly interest rate, then they work out the amount of interest on the balance sum which is owed to the card company. The balance is calculated as the full debt minus the payment you made. The interest gets added onto your next month's balance.
If you again make a partial payment, the new balance is calculated again and the credit card rate (monthly one) applied to it for calculation of new interest; and it keeps going on and on until you make the full payment.
In this way, a vicious circle can occur. This is why interest rate is an important thing to consider when selecting a credit card. - 41115
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New Unique Article!
Title: An Overview Of Credit Card Interest Rates
Author: Alex Russell
Email: paul@mclelland27.plus.com
Keywords: credit card interest,credit card apr,credit card,finance,personal finance
Word Count: 406
Category: Finance:Credit
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