What Is APR And How Does It Affect Credit Cards?

APR stands for Annual Percentage Rate, which every credit card has, some just may have a lower APR than other credit cards. APR differs from credit card to credit card, sometimes it’s fixed, and sometimes it changes from month to month. APR only comes into serious play when you are doing what is called a “revolving” payment, where you only pay some of the bill every month. If you pay the bill in full every month then there will not be an APR fee applied.

What determines if the APR changes?

Whether the APR is low or high on a credit card depends heavily on the company providing the card. As a general rule most companies will provide information as to when and why your APR may change. Some companies may change your APR if you fail to make payments, or they may determine the APR based on your current credit history. Some credit card companies have an introductory rate for their APR, and after so many months this rate may go up dramatically. Watch out for this, because they may not notify you before the change in the rate. Some cards may also have a delayed APR, their offer may say “No interest until January 2008”, but after that they begin to charge the original APR, make sure to take note of the APR before making a choice based solely on the fact there is no beginning APR.

Is low or high APR better?

Everyone usually says that a credit card with a low APR is better, are they right? For people who might be on a tighter budget than most a low APR credit card is a definite. People who are planning on not paying their bill in full every month should look for a low APR credit card. Keep in mind though if you begin with a low APR that does not mean that it will always stay that way, creditors can choose to change your APR if they see that you are late on your payments or are not making payments at all, which hurts you in the end.

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