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Credit Card Interest Doesn’t Affect You?

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If you are like most people, you are currently carrying a balance on your or cards. The average person is currently carrying over $6,000 in debt and the figure is rising. While there may be legitimate reasons for having a in your wallet, there are many more problems and pitfalls. Understanding interest and how it affects you as well as the proper ways to leverage will enable you to positively benefit from this form of consumer debt.

Credit cards are issued to a variety of borrowers based upon their credit history and financial ability to repay the amount lent. from a credit card company are divided into (APR) and monthly .

The APR is the interest rates that the consumer will pay over the course of an entire year on the amount lent and is expressed in the form of a percentage. The APRs offered will range drastically and are often based upon a consumer’s current , as this score is considered to be a signal of the risk of default in the eyes of the lender. It is important to understand that the actual rate that a consumer pays is often much higher than the stated APR because most lenders compound the interest monthly. Consumers should expect that the actual interest that they pay annually to be 2-3% higher than the stated APR.

A monthly periodic rate is the charge that is paid in addition to the stated APR. Common additional rates or fees can include over the limit fees, late fees, membership fees, transaction fees and . Consumers should read their terms and conditions information closely to determine what possible fees could be added to their card’s balance on a monthly or annual basis.

The interest rate offered for a credit card can generally be changed without notice by the credit card company. The most common causes for changing the credit card’s rate are late payments, over the limit balances and rising reserve bank interest rates. Credit card companies do list the maximum allowable interest rate in their terms and conditions and this should be reviewed prior to becoming a card holder.

 


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Prepaid Cards
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