Wednesday, December 10, 2008

Low APR Credit Cards

Many credit card companies utilize the term low APR to advance their credit card offers. But how make you cognize if the card you are applying for is really a low APR credit card? To determine whether this is accurate or not, you're going to have got to look at the mulct black and white of these claims.

Here is some basic interest rate information to assist you determine if a "low APR credit card" is really "high interest rate credit rip-off".

Keep in head that interest rates are variable. Credit card rates are put by adding a spread, or margin, to a alkali rate. Your alkali rate is often a widely used index rate, which is almost always a rate that changes periodically, without warning and for no reason.

The spreading that is added to cipher your rate depends on your credit history. If you pay your measures consistently and on time, the spreading may be as few as 2 or 3 percentage points. If your credit history uncovers that you do late payments, or have got too much debt, the spreading may be 5 or 6 percentage points or more.

The advertised rate on a credit card is often the card's simple interest rate. The effectual interest rate, however, is your true cost of borrowing and includes annual fees you pay to utilize the card. The compounded interest rate is a better barometer of your effectual interest rate. For example, if your card have a rate of 12%, your monthly rate would be 1%. Because credit card interest is compounded monthly, the effectual annual interest rate on a 12% simple-rate card is 12.68%. By doing a small research, you could salvage yourself a batch of money in interest in the long run.

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