All About Credit Card Rates

Credit card rate

What's the thing that is most prominent on any credit card ad? Well, it is the credit-card rate (or the APR, as we know it). The credit-card rate is the most publicized thing in the world of credit-cards.

A lot of people just compare the credit card rate of various credit-cards and just go for the one that is offering the lowest credit-card rate (or APR). Credit card rates are, as a matter of fact, one of the most essential factors in the selection of a credit card (though not the only factor).

Therefore, a proper understanding of Credit card rates is even more necessary. So, what is a credit-card rate or APR? Very simply, credit card rate is the rate of interest that the credit-card company will charge you with on the amount you're indebted to them for.

The credit card supplier will charge you an interest only if you do not make complete payments in time. If you receive your credit-card bill, it specifies the full amount you owe the credit card supplier. It also specifies the lowest amount payment that you must make (by a particular date), in order to avoid incurring a late fee and other inconvenience. You have the alternativeof making either a complete payment or just the lowest payment.

If you make a complete payment (by the due date), you won't be charged any interest. In any case, if you decide to go with the lowest amount payment or some amount that is smaller than the full amount, the credit-card companywill charge interest based on the credit card rate and the balance amount. This credit-card rate is the rate of interestthat you agreed with them at the time of applying for the credit-card.

The credit-card rate or the annual per centum rate, as is obvious, is an yearly rote of interest. Credit-card companies use this annual credit-card rate to work out the credit-card rate to be paid every month and then they work out the interest on the balance amount that you have borrowed from them.

The balance amount here is simply = Full amount (payment made by you). This interest is added to your balance for the consequent month (at the time of consequent billing cycle).

If you again make a partial payment, the new balance is computed again and the credit-card rate (monthly one) applied to it for calculation of new interest; and it keeps going on and on until you make the complete payment. That's how credit-card rate acts in this vicious circle.

Hence, credit-card rate is termed as the most essential consideration in choosing a credit-card.



 


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