When shopping for a credit card, it is important to understand the annual percentage rate (APR) to find the best deal for your situation. If you pay off your bill every month, a no fee and moderate APR plan may be best. However, if you take out cash advances, you will want a low APR on that feature.
Various APRs
Each credit card has several different APRs. At the minimum they will have a rate for purchases, cash advances, and transfers. Typically, cash advances will carry a higher rate than for purchases or transfers. Transfers usually carry low rates. Sometimes you can even find an APR of 0% for an introductory period.
To entice you to open an account, credit card companies offer introductory and delayed APRs. An introductory rate lasts for a certain period, usually six months to a year. Delayed APRs charge no interest until a certain month.
Some cards also offer tiered rates, which keeps rates low for those that carry a small balance. For example, a card might offer 15% on balances between $1 – $1000 and 18% on balances over $1000.
Credit card companies also have penalty APRs. These apply when a payment is late, as outlined by the...
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