Credit Card Interest Rates - APR
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Credit Card Interest Rates - APR
Credit card interest rates can be surprisingly high, sometimes reaching up to 30% annually, depending on your credit history. Credit card companies are increasingly vigilant, monitoring for late payments and over-limit charges. These actions can result in higher interest rates and reduced credit limits.
Understanding APR
The Annual Percentage Rate (APR) is the interest rate charged if you carry a balance month-to-month, take a cash advance, or transfer balances from another card. If you often carry a balance, seek a card with a lower interest rate, which usually requires a strong credit score. Be aware that some companies may also charge an annual fee.
Rate Trends
Many major card issuers have reduced interest rates below the 18-19% levels common in the 1980s and early 1990s. It’s important to check how different rates apply: there’s typically an APR for purchases, a higher one for cash advances, and another for balance transfers.
Grace Periods and Charges
If you have unpaid balances from previous months, you may not benefit from a grace period for new purchases. Typically, a grace period allows you to avoid finance charges if you pay your balance in full before the due date.
Federal Oversight
The Federal Reserve surveys credit card companies biennially and provides a user-friendly explanation of credit card terms. They've mandated that companies give at least a 45-day notice before raising interest rates and provide clearer information on fees. Meanwhile, the Federal Trade Commission offers guidance on understanding terms and how to file complaints.
By staying informed and vigilant, you can better navigate the complexities of credit card interest rates and make more financially sound decisions.
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