Annual Percentage Rate (APR) Explained
The annual percentage rate is a measurement of what the credit extended to you is going to cost. It tells you the rate you will be charged interest on a yearly basis. Basically, APR provides an indication of how expensive your credit is going to be.
Credit card issuers must, by law, not only disclose the APR of the credit card, but also the periodic rate. The periodic rate is the rate of interest applied to your outstanding balance during the billing cycle. The billing cycle typically runs every 25-30 days.
Most credit card issuers utilize what is known as “variable rates”. Variable rates allow the credit card company, at their discretion, to change the APR of your card as interest rates change. Your APR could be raised or lowered, which in turn means you will be paying more or less in interest.
Always be aware of what the APR on the credit card application that you are interested in is. Carefully read the terms of the offer before you apply. And never miss a payment, or pay late if it can at all be avoided. Missed and late payments will most assuredly result in a higher APR.
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