Understanding the Low APR Credit Card Offer

Ah yes...the ease, the convenience of the credit card. Shopping for those essentials or not so essentials has never been easier. Never before has the credit card companies made it so easy for the consumer to indulge in various cash-less shopping activities. It seems anyone can get a credit card these days with a new offer coming in the mail almost weekly.

When getting a new credit card most people don't consider which one offers the lowest annual percentage rate (APR)? Many don't read the fine print of these various credit card offers. Most of them do not even know how interest rates could affect their billing. They just fill out the form in order to get the new card and any incentive being offered and then take their new card and go shopping.

What is the credit card APR and what are the terms of getting a low APR on your card? Credit card APR is simply the cost the credit card company is charging you for borrowing money against the card. That cost you pay back in an Annual % interest rate. Again in it's most basic since the APR is how much the credit card company is charging you to barrow money against your card.

This interest or APR can very from around 6% to more than 30%. Of course, it should seem clear that the cards with the lowest APR are those that have 6% or lower. But APR's can be tricky especially if the consumer has no idea what interest rates mean. Or where to check for what you are currently paying in APR on you card.

What we are seeing a lot of today is credit card company's making very low APR introduction credit cards. In fact, some credit card companies have lowered their APR to as much as 0%. This low APR is usually given during an introductory period to entice new credit card holders to sign up for their card. Than once the introductory period has elapses the credit card company increases their credit cards APR.

It is in the consumer's best interest to understand the terms of that low introductory APR. And what the APR will change to after the introductory period is over. Credit Card APR has two faces: there is a fixed APR and there is a variable APR.

The fixed APR card has a more stable interest rate than a variable APR one does. The rate of return is fixed and stated in the terms of your card holder agreement. You can also find this rate listed in your credit card billing statement.

Variable rates, on the other hand, can start really low but it all depends on the prime rate of the Federal Reserve. This means that when a credit card has it's APR tied to the Federal Reserve rate it can be increased at any time.

With all this said, there are quite a few credit cards that have a low APR. The APR is actually where the credit card companies earn their living. The zero percent introductory APR cannot be kept for the life of the card without the credit card company closing its doors.

Here a few things to take away from what's being said:

When applying for a low APR credit card know what the terms of the low rate are?

If the low APR is an introductory rate than for how long?

Once the introductory rate expires what will the new APR change to?

Does the card have a fixed or an adjustable APR?

It the introductory APR applies to balance transfers is there a balance transfer fee?

The bottom line here is that consumers should be really conscious of their APR and other interest rates. Low APR credit cards may not be very beneficial if it will only last for 6 months or so. The key is to understand the terms attached to that new card you are about to send away for.