Low APR credit cards
As the
name suggests, low APR credit cards are those that offer one consistently low
interest rate from the outset. APR stands
for annual percentage rate, which is the interest rate applied to a loan or a
financial product such as a credit card for a whole year.
The rate you pay will
vary depending on the APR, so it vital to pay keen attention to this before
committing to a credit card.
APR takes
into account the total amount of interest to be paid, additional charges such
as a monthly fee for taking out the card and the frequency of repayments.
However, it doesn't include charges you may have to pay, such as a penalty fee
for missing your monthly repayment.
Because
all credit card providers have to quote an APR, it is easy to compare products
offering low rates. The downside of low APR credit cards is that the deals
mostly work on a no-frills basis, so they're unlikely to have lucrative interest-free purchase or balance transfer offers, which can deliver significant
savings.
Good
for: People who
aren't in a position to pay off their balance in full every month. Using one of
these cards means you're not paying huge amounts of interest on your debt.
Bad
for: Conscientious
balance-clearers who never pay interest anyway and would benefit from the perks
- like rewards and cash
back - that other
cards offer.
Those who
like to 'play the market' and switch to the next best 0% deal when their
current offer expires.
TIP: It may be wise to
put money aside each month, so that you can pay off the balance once the
interest-free period ends.
