in

What is a good APR on a Credit Card?

You may incur medical treatment, electronic purchases, or travel or accommodation costs at some point. Note that these costs are significant. You may or may not be able to afford them along with your regular monthly expenses and obligations. Given this, you may consider putting off some of these expenses, but some are unavoidable.

However, you can meet all your planned and unplanned significant expenses using a Credit Card. It is the most popular plastic money, allowing you to readily access a pre-approved line of credit. You can swipe the Credit Card to make various offline and online transactions. You can convert the dues into Equated Monthly Installments and repay as per your affordability.

Like any other credit facility, you need to pay a fee to use your Credit Card. This fee is called the Annual Percentage Rate. Let us understand the meaning of APR, the ideal APR, and ways to qualify for it.

What is APR on a Credit Card?

APR is the interest rate applicable to your Credit Card’s unpaid balance. It impacts your total repayment amount, so you must consider it. You may wonder what made banks introduce the concept of APR, a yearly interest rate when the Credit Card interest rate is calculated and compounded daily. APR was created as a standard parameter for comparing different bank offers.

Furthermore, the APR includes the charges imposed by the bank on the Credit Card along with the interest rate. This gives you a clear idea of the total cost associated with borrowing from your Credit Card. The APR on a Credit Card is of two main types: fixed and variable. Fixed APR remains constant, allowing you to predict the borrowing cost easily. Variable APR depends on changes in the market interest rate and, hence, is subject to change.

You can benefit from the lower variable APR but are liable to pay a higher interest if the variable APR is higher.

What is a good APR? How to qualify for it?

Since APR impacts your total repayment amount, the lower it is, the better. This is because a lower APR makes your repayment affordable. Every bank has a different APR on Credit Card. Hence, learn about the various bank offers, compare, and apply for a Credit Card at a bank offering the lowest APR. Note that several banks offer an introductory APR on Credit Cards, which is comparatively lower than the standard APR.

The introductory APR is applicable for a limited duration post which the standard APR applies to your Credit Card usage. Consider the standard APR when choosing a bank for a Credit Card application. The bank considers your credit history and scores to determine a suitable APR on Credit Card. Keep up with a clear credit history and excellent credit score to get a lower APR on your Credit Card.

Written by Shreya Eppili

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

    Understanding interest rates in Car Financing

    How Data and Insights Are Transforming Life Sciences?