A credit card can be a very handy tool, since it makes it possible to make purchasing easier when we don’t have the cash on hand. It can be used for emergencies, making large purchasing that one cannot normally afford, or even great for helping to build a positive credit history. No matter what the purpose may be for the credit card, there are a few things to consider when choosing a low APR credit card.

APR – Annual Percentage Rate

The term APR stands for annual percentage rate, which is the fee charged to the card every month there is an outstanding balance. Even though it is an annual rate, the fee is usually charged on a monthly basis and added to the total balance on the card. The APR is usually determined by the credit card company based on the applicants past credit history and current credit score.

An annual percentage rate can vary from about 5% all the way up to 30%, and it can even change month to month depending on the terms of the credit card.

The APR is the method credit card companies use to make money off of their clients, and it is the price cardholders pay to be able to pay for purchasing over time instead of upfront. Even though there are additional fees associated with credit cards, the APR is usually the highest fee since it is based on the remaining balance on the card.

Because the APR is the main way credit card companies make their money, credit card companies can charge as much as they wish every month to make money. It is up to the cardholder or potential cardholder to choose a credit card that does not have a sky high APR, since it will only cost them a great deal of money in the long run.

Introductory Period – The Hook!

One of the ways that credit card companies get cardholders to pay such a high APR is by first extending an introductory period, which usually offers a 0% APR for a set amount of time. While it does seem like a dream come true to not have to pay any interest, the time period ends and a very high APR is tacked onto the card.

This is also the case for cards with a variable APR, since it has the ability to increase over time. The card will start off with a very appealing and low APR, but will dramatically increase as months pass by. This can make a cardholder owe a lot of money in the long run if they have a balance on the card, making it almost not worth it to use a credit card for purchases.

Choose Low APR with NO Introductory Period

The best bet for potential credit cardholders is to look for cards with low APR, and try and avoid those with introductory periods. A low APR is not always possible since it is based on current credit score, but the only way to fix that is by being a cardholder and building up a good credit history.

Choosing a credit card with a low APR is the best way to get all of the benefits a credit card has to offer, but you won’t have to worry about paying a great deal of money in the long run.