Credit Card Rate

What is the thing that is most prominent on any credit card commercial? Well, it's the credit card rate (or the APR, as they know it). The credit card rate is the most publicized thing in the world of credit cards. Lots of people compare the credit card rate of various credit cards & go for the that is offering the lowest credit card rate (or APR). Credit card rates are, in fact, of the most important factors in the choice of a credit card (though not the only factor). Therefore, a proper understanding of Credit card rates is even more necessary.

So, what is a credit card rate or APR? Very basically, credit card rate is the rate of interest that the credit card supplier will charge you with on the amount you owe them. The credit card supplier will charge you an interest only in the event you don't make full payments in time. When you receive your credit card bill, it specifies the full amount you owe the credit card supplier. It also specifies the maximum payment that you must make (by a specific date), in order to keep away from incurring a late fee & other inconvenience. You have the choice of making either a full payment or the maximum payment. In the event you make a full payment (by the due date), you are not charged any interest. However, in the event you select to go with the maximum payment or some amount that is lesser than the full amount, the credit card supplier will charge interest based on the credit card rate & the balance amount. This credit card rate is the rate of interest that you agreed with them at the time of applying for the credit card. The credit card rate or the annual percentage rate, as is obvious, is an annual rate of interest. The credit card suppliers use this annual credit card rate to calculate the every month credit card rate & then they calculate the interest on the balance amount that you owe them. The balance amount here is basically = Full amount (payment made by you). This interest is added to your balance for the next month (at the time of next billing cycle). In the event you again make a partial payment, the new balance is calculated again & the credit card rate (every month) applied to it for calculation of new interest; & it keeps going on & on until you make the full payment.

That's how credit card rate acts in this vicious circle. Hence, credit card rate is termed as the most important consideration in choosing a credit card.