APR, better known as Annual Percentage Rate, is simply the cost charged for borrowing the money. It takes into account the interest rate as well as other charges that might be mentioned in terms and conditions. However, is that all to know or there is something else about what is APR? We will find out here!
1. Banks Define Clearly How Their APRs Work
When you are comparing different credit cards or loan terms, you would continuously come across this term. It is important because it provides a good idea of how cards are different in terms of extra fees involved. If you are looking for Good credit cards, then you must consider the mail offer by 60secondpremier card.
APR includes the compulsory charges only. Sometimes additional expenses such as card protection fees might be considered but that is not always true. It also does not cover the late payment fee or the penalty charges when you cross the credit limit.
2. There Are Different Kinds of APRs
APR is a broad term. As mentioned before, it may be a sum of a lot of different charges incurred on the card or loan. Some of the commonly known APR fees are the purchase APR that is charged on the things you buy using the credit card.
Another one is the cash advance APR. This is applied in case you borrow cash using your credit card. These vary from one card to another but almost always no grace period is allotted. Like For Capital One credit card cash advance APR would be different from the first premier bank.
Then comes the penalty APR. This is added to your expenses if you are late with a payment. It may also be applicable when you violate certain terms and conditions involved with the card’s use.
The last one is the introductory APR. Some customers might also know it as a promotional APR. This is a rather low amount application on a certain transaction only such as cash advances, foreign transactions, etc.
3. You Can Calculate The APR Yourself
If you ever feel the need to figure out how APR works yourself, it is a relief to know that you can calculate it on your own. The banks also use a defined formulate for calculating APR.
This calculation takes into account the monthly periodic rate applied by the bank. This term is simply multiplied by the number of days in a year to calculate the annual percentage rate.
Is The Annual Percentage Rate Really Important?
The answer to this question is that..
APR is SUPER important!
It is necessary that you are aware of the fee you are paying on any debt or card that you carry. It is the money you are paying in return for the money borrowed from the bank!
Therefore we always suggest the customers stay away from card offers that apply high APRs. This might turn out to be overwhelming for your budget.
That’s it! We think this is all you need to know about what is APR. Keep in mind that before getting a credit card, the annual percentage rate can help you know the overall worth of offers and promotions that the card offers.
Also, note that the bank normally does not change the APR mentioned in your approval letter before a year of card’s use. Even if they wish to introduce any alterations, they must notify you 45 days in advance. Nonetheless, you should always review these terms before receiving the card.