credit card apr

conquering credit & credit cards

Share

Share on facebook
Share on twitter
Share on linkedin
Share on email

what's in this lesson?

One of the most confusing things about credit cards is this thing called “APR.” What is credit card APR anyway? We’ll answer that question for you and tell you what you need to know to (hopefully) avoid paying interest.

credit card apr

conquering credit & credit cards

Share

Share on facebook
Share on twitter
Share on linkedin
Share on email
  • Overview
  • Transcript
  • Resources

credit card apr

conquering credit & credit cards

One of the most confusing things about credit cards is this thing called “APR.” What is credit card APR anyway? We’ll answer that question for you and tell you what you need to know to (hopefully) avoid paying interest.

If you’ve ever seen a car commercial, you’ve almost definitely heard the term “APR.” Well, APR exists for credit cards too. Essentially, credit card APR is an interest rate, and it refers to how much you have to pay on money that you borrow. APR itself stands for “annual percentage rate” and the way it works for credit cards can vary. Let’s take a quick look:

 

What is APR?

  • First, keep in mind that , if you’re staying on top of all your bills and paying everything off on time and in full, you may not even have to worry about it. Easier said than done…
  • How does credit card apr (or credit card interest) work? That’s the rate at which you may have to pay interest on your credit card balance if you aren’t paying it off in full when each bill is due.
  • Let’s reiterate: if you pay your bill off in full, meaning if your balance is $1,000 and it’s due by July 12th and you pay off that $1,000 by July 12th… and you continue to do that every month… you won’t have to worry about APR at that time.
  • But, if you’re not paying it off in full and, for example, you pay $500 of the $1,000 balance, you’re going to have to pay interest on what you owe. The amount you owe is calculated using your specific credit card’s APR.
  • How does that work? Doesn’t “annual” mean yearly? Well, the yearly rate is actually used to calculate a daily rate. Let’s look at an example.
  • We mentioned you could have a $1,000 balance and you only pay $500 by the due date. Let’s say the APR is 25%. To calculate how much interest you’ll pay is .068% (.25 / 365), which is how much will be added to your balance each day until you’ve paid off your bill.

 

Why APR matters to you

Pay close attention to credit card APR. One of the annoying things about APR is that, even if you just forget to pay your bill, you’ll have to pay a penalty. So, make sure you are considering APR when applying for your next card.

Interest can really compound, so do your best to keep your bill manageable so you can keep paying it off on time.

 

Source(s): Bankrate

what's in this lesson?

One of the most confusing things about credit cards is this thing called “APR.” What is credit card APR anyway? We’ll answer that question for you and tell you what you need to know to (hopefully) avoid paying interest.

Transcript

If you’ve ever seen a car commercial, you’ve almost definitely heard the term “APR.” Well, APR exists for credit cards too. Essentially, credit card APR is an interest rate, and it refers to how much you have to pay on money that you borrow. APR itself stands for “annual percentage rate” and the way it works for credit cards can vary. Let’s take a quick look:

 

What is APR?

  • First, keep in mind that , if you’re staying on top of all your bills and paying everything off on time and in full, you may not even have to worry about it. Easier said than done…
  • How does credit card apr (or credit card interest) work? That’s the rate at which you may have to pay interest on your credit card balance if you aren’t paying it off in full when each bill is due.
  • Let’s reiterate: if you pay your bill off in full, meaning if your balance is $1,000 and it’s due by July 12th and you pay off that $1,000 by July 12th… and you continue to do that every month… you won’t have to worry about APR at that time.
  • But, if you’re not paying it off in full and, for example, you pay $500 of the $1,000 balance, you’re going to have to pay interest on what you owe. The amount you owe is calculated using your specific credit card’s APR.
  • How does that work? Doesn’t “annual” mean yearly? Well, the yearly rate is actually used to calculate a daily rate. Let’s look at an example.
  • We mentioned you could have a $1,000 balance and you only pay $500 by the due date. Let’s say the APR is 25%. To calculate how much interest you’ll pay is .068% (.25 / 365), which is how much will be added to your balance each day until you’ve paid off your bill.

 

Why APR matters to you

Pay close attention to credit card APR. One of the annoying things about APR is that, even if you just forget to pay your bill, you’ll have to pay a penalty. So, make sure you are considering APR when applying for your next card.

Interest can really compound, so do your best to keep your bill manageable so you can keep paying it off on time.

 

Source(s): Bankrate

Additional Resources

How's it going?

1 = not helpful at all; 5 = extremely helpful

Sign up for course updates!

* indicates required
What topic(s) are you interested in?

By subscribing, you agree to our Privacy Policy and Terms of Use. You can unsubscribe at any time by contacting onomy or using the unsubscribe link.

lessons