This is the age of plastic money and the use of credit cards has become very commonplace. Credit cards provide financial freedom and the freedom to move without having cash in your wallet. However, nothing comes for free in this world, and credit card companies are also doing business. They profit by way of charging interest on unpaid bills. This is called APR. When going for a credit card, it makes sense to look at the APR being charged. It is only natural that customers would go after lowest APR credit card , but there are many more factors that need to be kept in mind when shopping for a credit card in the market.
Let us see what the real meaning of APR is and how it affects you? Suppose you have got a credit card issued and purchase something worth $1000. You do not pay this amount in the stipulated time and are thus liable to pay the credit card company as per the APR which is the annual percentage rate. Normally APR varies for different cards and also for different persons. If you have a bad credit score, credit card companies charge a higher APR. If the APR of your credit card is 10, then at the end of the year, you have to pay the company 10X12=120% of $1000 which comes to $1200. This is how credit card companies make profit and this is precisely why you need to go for lowest APR credit card.
By law, all credit card companies are required to disclose the APR they intend to charge from their customers. This allows the consumers to compare various credit cards available in the market as to which one is suitable for their needs and requirements. However, there is still a lot of confusion as different companies calculate APR in different ways. This implies that a loan with a credit card with the lowest APR may not necessarily be cheaper than with a credit card with a higher APR. What this signifies is that the customer must be careful before signing with any credit card company and must read the fine print carefully to safeguard his financial interests. Sometimes, introductory period offer is highlighted by the company to lure customers. These companies apply very high APR after the end of this introductory period. Even when you have found the lowest APR card do a proper research before signing an agreement.
What many people are unaware of is the fact that credit card companies keep on changing their APR based upon Federal Reserve Rate. This means that that the consumer needs to contact the customer care department of the credit card company to be aware of the latest APR of the company so as not to be felt cheated later on.
Then there are credit card companies that start to charge interest on the completion of 15 days instead of allowing even 30 day interest free period.