You can see how much transferring a balance could save you by using our balance transfer calculator. Be sure to check if there are any transfer fees involved when you look at balance transfer card.
APR can sometimes seem like a tricky maths problem based on confusing percentages, rates and balances. Now you know all the important bits, you can start comparing credit cards on a like-for-like basis. What is a credit card APR? Share this article. What the APR calculation is based on The APR is based on the interest you'll pay if you carry your balance, as well as any standard fees such as annual fees that apply to your account.
Text version only. The APR calculation is based on: The interest you'll pay if you carry your balance plus any standard fees that apply e. It doesn't include non-standard fees and charges. Cards with an initial interest-free promotion such as with some balance transfers will have an APR that kicks in after a certain amount of time. The interest is added to your outstanding balance when you get your monthly credit card bill. This means the interest rate could change depending on the Bank of England Base Rate , or how you use the card, e.
And if your card has a grace period, the issuer must ensure that bills are mailed or delivered at least 21 days before the due date. A fixed APR typically remains the same, but it can change in certain circumstances, such as if your payment is more than 60 days late or when an introductory offer expires.
Many variable interest rates start with the prime rate, then add a margin. The result is your variable APR. If you have excellent credit generally scores of or higher , you may be more likely to qualify for a lower interest rate because a credit card company may consider you a lower-risk customer. You can also read your cardmember agreement to learn more about interest rates and fees.
The good news? So, the amount of interest you pay annually depends on how your balance fluctuates over the year. So, APR can be a good way to compare credit cards , but remember that what you actually pay in interest depends on how and when you pay your debt off.
That means that almost half the people who are approved for the deal may not be eligible for the advertised rate, and have to pay more. The lender will usually decide what rate to offer you based on how your credit and financial information matches their criteria. As a general rule, with a loan, the more you borrow, the lower the APR is likely to be. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
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The information on this site does not modify any insurance policy terms in any way. APR stands for annual percentage rate and refers to interest on a credit account. With a credit card, APR generally refers to the interest applied to your account during a given billing cycle. It most often comes into play when you carry a balance, but other transactions—like cash advances and late payments—are also subject to APRs, which might be higher than your regular rate.
Everyone with a credit card should know how APR works, when it might be applied, and, most important, how good financial habits can help you avoid it. This is how APR is calculated for credit cards:. For example, if your APR is 18 percent, your daily rate is.
Average daily balance : Add up your balances at the end of each day in the billing cycle and divide the sum by the number of days in the billing cycle.
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