Understanding APR
The Annual Percentage Rate (APR) is the percentage of interest that you will be charged for your credit card over the period of one year, this is nessecary to understand if you want to improve credit score. This additional fee is added on each month that there is a balance on the card. You can see what percentage you are paying monthly or daily by dividing the percentage by 12 or 265, respectively. In order to avoid paying the APR, you must simply pay the entire balance on the card. Most Annual Percentages Rates range within 5% to 20%.
The APR you receive for a credit card can vary greatly depending on a number of factors. Your credit rating will affect the rate at which you will be approved, with those with lower scores tending to receive higher interest rates. The rate can be charged in one of two ways, at a fixed rate or varied rate. A fixed APR can be changed by the company, but must require a written notice by sent to the card holder so many days prior to the alteration. Variable APR’s can change monthly without notice.
Many companies will offer introductory rates that are quite lower than what the actual rate will be. This is to entice consumers to accept a credit card offer. It is important that you read the terms and conditions that come with the card in order to know when the intro period will expire. Most introductory periods will last nine to 18 months. Also, it is vital that you learn what the new APR will be when the rate reverts to its regular percentage. Sometimes it can be a much larger rate, taking the cardholder by surprise.
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