The annual percentage rate isn’t one of the coolest parts of a credit card – airline miles win there – but it can be very important.
To some, the APR is all that matters.
To others, the APR shouldn’t matter at all – high or low it will have little impact.
Here’s how you should shop for credit cards based on the APR:
1) If you carry a balance – If you carry a balance on your credit card the most important thing you can do is pay attention to the APR. No matter how good the rewards or benefits on another card, the difference in APR will always be greater than the benefits from a credit card. If you carry a balance, look toward low APR cards without rewards. Cards without rewards can come with single digit interest rates, much lower than other cards.
2) If you pay in full each month – Those who pay in full each month and know they will always pay in full can shop for a credit card without worrying about the interest rate. A higher interest rate for better rewards is little concern when one does not carry balances from month to month. Remember, you’re charged interest only after the grace period, which means those who pay in full are never charged a dime in finance charges.
Always be sure to read the terms and conditions on the back of a credit card application before you agree to a new credit card. There you will find much more than just the APR including any and all fees, other finance charges, and details of a rewards program, if there is one.
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