You can find credit cards with low APR on the Internet or through your financial institution. Keep in mind, however, that even though low APR credit cards are available, you need to meet certain requirements in order to qualify for them. A credit card is a financial responsibility not to be taken lightly and if you are not responsible, you will not be able to take advantage of some of their perks.
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One situation where you may find low APRs on credit cards is through introductory offers. Some low APR credit card companies offer you a low rate to lure you in and get you to apply for their card or transfer your balances over from other credit cards. Although this can be a good way for you to save money, be aware that this can blow up in your face as well.
What is an APR?
Before you apply for a credit card, you need to be aware of the different terms. APR is a big one and it will affect your bottom line greatly if you don’t understand and respect it. APR stands for the annual percentage rate and it refers to the interest rate or cost of funds over a whole year.
An APR can be either fixed or variable. A fixed rate credit card means that the interest rate states the same, supposedly throughout the whole term of the loan. In regards to credit cards, however, the company has the right to change the credit card interest rate at any time as long as it gives you due notice.
A variable APR will change based on factors such as a change in the prime rate.
There is a difference between fixed rate and variable rate credit card APR. Unlike with a fixed rate, a variable credit card APR can change at any time and without any notice to you.
A lower APR is in your best interest financially because less interest is charged on the balance of your loan. Although many credit cards have interest rates in the teens, some cards have lower APRs.
Which financial institutions are the best for credit cards with low APR?
If you belong to a bank or other financial institution, you may want to ask a representative about the credit cards they offer and what their interest rates are. If you inquire about a credit card through a place you have done business with, there is often a better chance you will be accepted because they know your financial history and habits.
One type of financial institution that is great to check out if you are not already a member is a credit union. Credit unions are owned by members, which are the people who have the accounts such as savings and checking accounts. Because of this, the credit union makes decisions that are beneficial to you.
One of the benefits that members of credit unions enjoy is interest rates that are more consumer-friendly. This means that interest rates on savings accounts and CDs are usually higher than at banks, and interest rates on loans such as auto and home loans and credit cards are lower. You will often have better luck finding a low interest credit card through a credit union.
To find out more about credit unions and to find one near you, check out My Credit Union.
When should you be wary of credit cards with low APR?
In general, low APR credit cards are a smart way to go. However, be careful if you sign up with a credit card that has a low introductory APR. It is enticing because often the APR is 0%. The period of this low rate can range from three months to 18 months and then the interest rate increases.
When the APR increases it usually rises to a high interest rate. This is why most people get into trouble. If you do get a credit card with a 0% interest rate, make sure you pay off the balance before the introductory period expires.
Keep in mind that if you have a poor credit history you will more than likely be denied for a low interest credit card. People with low credit scores are given cards with a higher APR. Fortunately, there are ways to improve your credit score, although it takes some time. For tips on improving your credit, visit SmartMoney.
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