Article Advise

submitted: Aug 27th 2008 | by: MichaelBenifez | Total views: 2 | Word Count: 503 | |

With more and more Americans finding themselves further and further in debt to credit card companies, it may be more important than ever that consumers educate themselves about the terms and conditions of their credit card contracts. And the most important of those is the APR or Annual Percentage Rate.

The APR determines how much interest the cardholder must pay on any principal balance not paid by the end of the month. A lower APR, of course, is better than a higher APR because it means less interest. The APR can vary from card to card, and it can vary from cardholder to cardholder. Typically, cardholders with poor credit histories will be charged a higher APR because they represent a greater risk of nonpayment. Customers with excellent credit, on the other hand, are typically offered better percentage rates.

Like with any other expenditure or investment, shopping around for the best deals is always a good idea. Credit card companies are always offering better deals, sometimes with lower APRs, sometimes with rewards, sometimes with more lenient charges on balance transfers. It's important that the consumer know what exactly he or she is getting for the money.

To further complicate matters, credit card companies often charge different APRs for different types of transactions. While one rate, usually the one advertised, applies to purchases and balances held, another rate may apply to cash advances. Still another rate may apply to balance transfers from another credit card or financial instrument. If the consumer doesn't realize it, he or she may end up paying much more interest than the advertised APR seemed to call for, making that seeming good deal no deal at all.

Card companies do compete for business, though, and they do that by trying to offer better interest rates than their competitors. Consumers owe it to themselves to shop around for the best APR they can find. Consumers also owe it to themselves to negotiate the best deal possibly with their current lender. This can be done by keeping a close eye on your payment track record and presenting it to the company with a request for a lower APR. If a card company knows that you are eligible for better rates elsewhere, they'll offer you a better rate to keep your business.

The APR isn't the only thing important in the Terms and Conditions of a credit card contract, however. Penalties for closing the account should be taken into consideration. With cards that offer rewards, those should be taken into account as well, though often keeping the rewards is not enough incentive to keep the account open when the APR is too high especially when so many 0 APR card options exist.

Perhaps the best advice to consumers would be to be thoroughly familiar with the entire Terms and Conditions of any credit card agreement. Ignorance of the APR and what it means, and what using the card will cost you, is no excuse and can lead to real trouble for the cardholder who can't pay his or her bill.

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