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Credit Cards  What are  APR's

The APR or annual percentage rate is the standard way of expressing the amount of interest expressed as an annual percentage that you will be required to pay if you allow the balance on your credit card account to carry over to the following billing period, or if you transfer a balance from a different credit card or if you withdraw a cash advance from your credit card. 

Each of the annual percentage rates may be different, but each rate must, according to law be expressed as an annual percentage rate in order to standardize the amounts so customers can easily compare and contrast them.

A single credit card may have more than one--even several annual percentage rates.  For example there is one APR which is applied when you make a regular purchase using your credit card.  Another usually larger APR is applied to your balance for any cash advances which you might take.

There is often a third type of APR which is used when a balance transfer occurs.  The balance transfer APR is also usually larger than the regular purchase APR, as well.  A credit card may have an APR of 15% for purchases, !7% for advances in cash and 18% for transfers of balances from other credit card accounts.

Another type of common APR is a tiered system.  Under this system of annual percentage rate application, different interest rates are attached to different tiers of the balance from the previous billing period.  An example might be an APR of 15% on balances up to $500, and 18% on balances which exceed $500.

A higher APR may be applied as a penalty when you are late in making your monthly credit card payments.  Your credit card agreement could state.  "If a payment is more than ten days past the due date twice within the previous six month period, a penalty rate will be applied."

This can get very expensive especially if you have a high calculated balance.
 An introductory APR is usually provided to lure card users to transfer balances to a new card or to open a new charge card account.  The introductory rate APR can sometimes be very inexpensive--as low as 0%, but it's important to realize that a new higher rate will be applied after the introductory APR rate ends.

Another way of expressing APR rates might state that there will be 0% interest for 6 months.    This is called a delayed APR.  It's important to determine what the future APR rate will be, before making a decision on the financial benefits of this card.
You should be very aware of the APR cost on your credit card accounts, especially if you usually carry forward a portion of your account balance each month.  Even a fraction of a percentage point in the APR can made a very large difference in cost over the course of a year.

FIXED VS VARIABLE APR
Check the disclosure statement to determine whether the credit card offer is for a fixed rate or a variable rate APR.  The variable rate is usually tied to the Prime Rate.

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