If you’ve been in the market for a new credit card but don’t want to pay more than you have to in interest rates, you might find yourself wondering exactly how you can sort through all of the promotional rates and other numbers that credit card companies throw at you to determine which card actually has the best rate.
By taking the time to read carefully through the information provided to you by the credit card company either in promotional materials on or their website, however, you can find all of the information that you want with relative ease. It’s simply a matter of knowing where to look, and what you’re looking for.
Defining the Annual Percentage Rate
The key to knowing how much you’re paying in interest lies in understanding the annual percentage rate, or APR. The APR is the interest that is charged on a credit card’s balance each year, and is subject to change depending upon nationally-set interest rates and the cardholder’s credit rating. If you want to compare credit cards based upon the interest that they charge, then you should compare them based upon the APR of each card.
Though the promotional advertising of many credit cards may only display the promotional rate that is being offered in a prominent position, the APR of the card is required to be disclosed along with additional information concerning billing structures, additional fees, and how these rates and fees are calculated and charged.
Where to Find the APR
In order to find the APR among all of the promotional information that generally accompanies credit card flyers, mailings, and websites, it’s important to know where to look. If you’re evaluating credit cards online, you should be able to find a link that will take you to a separate page that contains financial disclosure information and a chart that lists the APR along with other fees and charges that might accompany your card. Should you be looking at a mailing sent by the card company, there should be a separate page (or possibly the back of a page) that contains the same information and chart.
Concerning Promotional Rates
Don’t be fooled by the promotional rates that some cards offer, but don’t ignore the promotional rate either. Most promotional rates only last for a few months, generally either three or six, but that means that there are three or six months during which you’re only paying a very small interest rate. This can be especially useful if you’re transferring balances from other cards or using the new card to pay off older debts. It’s important to make sure that the rate which the card will revert to after the promotion is something that you are willing to pay, however, or you might end up with a much higher rate than you were looking for.
Making Your Comparisons
When comparing credit card interest rates, you should compare the APR of each card that you’re considering. Look for any processing or activation fees that may be charged, and avoid them if possible; if not, factor them into your considerations. You’re looking for the card that has the lowest APR and that has lower fees than the other cards or if possible that has no fees at all. Don’t ignore promotional rates, but don’t rely on them either? if you can find a card with promotional rates that also has a lower APR than some of your other options then great. If you can’t, don’t get stuck with a high interest rate just to start off lower.
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