How To Shop For A Low Apr Credit Card
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
How to Shop for a Low APR Credit Card
Summary
Finding the right credit card is more complex than it seems. The applications are often confusing, even for legal experts. The goal is to understand the card terms enough to avoid pitfalls and choose a suitable card.
Understanding Credit Card Terms
Credit applications often contain complex terminology, but identifying fees and penalties is crucial. The APR will appear in various places in the agreement with differing rates based on usage. Here's what to focus on:
Key Terms to Know
- Annual Fees: This is the yearly cost of using a card. Some cards have no annual fees, while others can be expensive.
- APR (Annual Percentage Rate): This rate determines how much you'll pay for carrying a balance. The higher the APR, the more interest you'll owe.
- Balance Computation: This refers to the period when APR is applied, determining interest at the billing cycle's end.
- Grace Period: This is the time frame to pay your balance before interest applies, typically at least 20 days.
- Other Interest Rates: These include rates for cash advances and balance transfers. Usually, purchase APR is the lowest, followed by balance transfers, with cash advances being the highest.
- Transaction Fees: Fees for non-purchase transactions like balance transfers or cash advances. Foreign currency transactions often incur a fee, usually around 3%.
What Are Low Interest Credit Cards?
The term "low interest" is commonly used but can be misleading. Often, 0% interest cards are introductory offers with rates increasing later. As of August 28, 2007, rates as low as 8.99% exist, but anything below 12% is generally considered "low." Be cautious of additional fees on cards with very low rates, as issuers will seek other ways to profit.
Choosing the Right Card
When choosing a card, consider how you’ll use it:
- Carrying a Balance: If you carry balances monthly (not advisable), a low APR is crucial.
- Paying in Full: If you pay off your balance every month, focus on avoiding high annual or transaction fees.
- Large Purchases: If you plan for big expenses, consider credit limits alongside APRs.
Your spending habits will guide your choice more than any other factor. Understanding these key terms makes selecting the right credit card more straightforward.
You can find the original non-AI version of this article here: How To Shop For A Low Apr Credit Card.
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