Inside Credit Cards

Credit Card Rates

What are credit card rates? Credit card rates are what the credit card companies charge you if you do not pay your balance off in full each month. This can range from 0 per cent up to 19%, 21% and even as high as a whopping 28% for some department store cards!

These rates have always been an issue in applying for a credit card, and are what everyone should know before choosing one credit card company over another. Shopping around for the best rates will give you the best deal, provided you pay attention to the terms of service.

For you to own a credit card, you should first know what the credit card rates are. What is an APR? What are the different kinds of rates?

Credit card rates are used to determine the interest of your credit card. It is used to know how much you would pay if you hold a balance on your account, if you have a cash advance or loan, and if you transferred a balance from other credit cards. The credit card rates are usually computed annually.

 1) APR. The APR signifies the annual percentage rate of the interest. The APR is used by the bank to know how much would be charged on your bill on a yearly basis. There are two kinds of APRs:

• Fixed. This kind of APR is an interest rate which has been arranged by the bank. The fixed APR would not be changed unless the bank or the credit card owner  amend the contract of agreement. The majority of credit card accounts that have fixed rates do not change very often.
• On-going. This kind of APR is the kind of interest rate that could change even after the signing of contracts and the grace period.

Note: Both the fixed and APR rates depend on consistency of the bill payments you make, and if you fall behind on your payments, you are extremely unlikely to be able to receive a lower interest rate!

2) Interest rate.

• Fixed. A fixed interest basically means that your rate cannot be changed unless the bank informs you that there have been some changes in the policies.
• Variable. A variable interest rate changes automatically whenever the basic rate of the bank increases or decreases. Note: Both the fixed and the variable rates could be changed by the bank at any time. This means that any bank could alter the terms and conditions of your credit account after a fifteen-day notice, however, most banks will give you more notice than this, and some credit card companies give several months notice of an increase. Naturally there are more increases in the credit rate than decreases!