Low APR Credit Cards May Not Be Created Equal - Know Your Cards APR and How it Changes

The choice in credit cards offers today is enormous with a range of features, APR, rewards, balance transfer and other options. The selection process is not an easy one. Each card offers the holder unique features for that card.

If you strip away all the fluff and fine print most credit cards have on minor differences in their offerings. One provides cash back on purchases, another you acquire points for travel and others let you consolidate your other credit cards.

One component of every credit card application will be the APR. The APR is short for the "Annual Percentage Rate" or the percent charged by the company to allow you to carry their card, make purchases and carry a balance.

APR For Every Type of Purchase

Understanding the APR is an important part of the overall credit card transaction especially if you carry a balance at the end of the month. The APR varies from card to card, type of card, the type of transaction along with buying and how you pay your bills.

Many consumers think of only one APR rate, however, a credit card can have numerous APR rates. For example, cash advances come with the highest APR; purchases on the other hand are usually a much lower APR. For instance, taking a $25,000 cash advance with your credit card could show up with a fat 23% APR on the advance. But, buying that flat panel LCD TV and home theater system although pricey slides in under the radar at 19%. Four percent may not sound like much but over time the charges add up.

Only reach for your credit card when the need is urgent ­ this means absolute needs not wants ­ or use your card for purchases you have the money for and can pay back at the end of the month without additional charges. Read these credit essentials.

Depending on your monthly balance can also make a difference in the APR charged. These changing APR’s move around as they are tiered and tied to your balance. Carrying a balance of $2,000 and below may trigger your APR to be 13.9% but once the balance moves above $2,001 the APR changes to 18.1%. This is just another reason to keep your balance low or better yet pay it off every month.

There is also an APR for the late payer. If you always seem to be late on your credit card payment each month your APR will often go up. This raises the balance and makes less of your payment go towards paying off your debt. Make your payments on time and pay more than the minimum.

The Intro APR

The introductory APR is the percentage rate you see plastered on the outside of all those credit card offers in your mailbox each week. They make for great marketing to entice consumers to make the switch to another card with a lower rate.

These cards come with a low interest rate and allows consumers to transfer and consolidate their outstanding balances onto one credit card. The rates look attractive, they can also be helpful if you’re trying to pay off all those past charges.

Before transferring any credit card balances make sure you understand the introductory APR period. Once the period has expired a new higher APR will be charged on the remaining balance. This APR rate is often very high, read the fine print before applying. When applying look for a card that offers 12 months at a 0% APR, then focus on paying the balance OFF in the 12 month period.

In closing do not look at the APR on an offer assuming everything is one rate or that it will last forever. Many financial conditions come into play. The choice of a credit card should be done carefully with a complete understanding of the APR at all levels.