The previous sections have no doubt made you realize how bad having a high apr is for carried balances. For example your card might have an apr on purchases of 20 the average credit card apr is around 17.

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Here are a few important terms you should know when looking for a credit card.

Credit card apr for dummies. You can consolidate your credit card debt by moving your balance due over to a 0 intro apr balance transfer credit card. Most credit cards are issued by one of four companies mastercard visa american express and discover. You might think of 10 per month as 120 per year but after interest you ll actually owe 133 93 at the end of one year and 297 34 at the end of two years.

Interest is charged as an apr or annual percentage rate. Apr or annual percentage rate is the interest rate you pay on a loan such as a credit card or auto loan on a yearly basis. Annual percentage rate apr.

This effective apr can be pushed even higher if your card charges you regular fees. Regardless of your card s apr it s a good idea to avoid interest whenever possible check out our guide to learn how credit card interest works. Your apr is shown as a percentage and includes fees and costs related to the loan.

A monthly charge of 10 per month for example becomes part of your accrued debt. Most credit cards are associated with a bank either a national bank like citibank chase or capital one or a local one. Some offer 0 introductory rates for a certain period on purchases balance transfers or both.

In simple terms it s the cost of borrowing the money. As well as the interest the apr also takes into account any compulsory charges like an annual fee if there is one. While these companies handle the transactions they don t necessarily handle your application.

Luckily there are a number of ways to escape high credit card apr. How to lower your credit card apr. Pay close attention to a card s default apr the rate you end up paying if you make a payment late or pay some other creditor late you exceed your credit limit or your credit score drops below a certain amount.

This is the cost of the credit expressed as an annual rate. The annual percentage rate apr is designed to be a benchmark for consumers providing an annual summary of the cost of credit. Introductory apr is a special temporary rate that credit card companies may offer as a perk for signing up with a specific card.