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You don't need to let credit card APR bulldoze you without a fight: take control! With the right knowledge, you can use APR to your benefit, even with seemingly negative APRs.
APR Management is a Perspective
Most people never take the time to consider their long term financial strategy when applying for a credit card. Once they see a special introductory APR [link to page 3] or low general purchase APR [link to page 2], they're sold. But that can be a huge mistake! The best credit card for you isn't any single or particular APR. It's a card that offers low APRs in several transactional categories that you use most. After all, every credit card has several different APRs ranging from transaction type to balance total to introductory period. You need to look at the big picture. The best credit card for you is the one that offers you the best APRs on the transactional services you require most from a line of credit.
Credit Card APR Management Begins with Self-Evaluation
You need to consider the long term effects of any credit card that you apply for. This means evaluating your lifestyle, spending habits and financial needs to determine the exact type of credit card you need. If you need to charge a significant amount of money to your card immediately and you don't plan to pay down that debt quickly, a tiered credit card is not your best choice. Two important APRs to consider when you plan your APR strategy are delayed APRs and penalty APRs.
Delayed APRs
Delayed APRs offer 0% interest for a specified amount of time. In a way, they are like low interest rate introductory APRs. The only difference is that introductory APRs usually have low interest rates; delayed APRs have zero interest rates! This is a perfect deal if you need to ring up a significant amount of credit card debt quickly but plan to pay it off in the next few months. Butt like lower interest introductory APRs, be sure to read the fine print: in the course of three to six months, your zero interest APR could skyrocket to 17% before you've had a chance to pay down your credit card debt.
Penalty APRs
The penalty APR is one of the most important annual percentage rates in your contract. Part of what makes it so special, is that you can control it! Most credit card contracts include a clause stipulating that should a credit-card holder (you) make a certain number of late payments (sometimes as few as two) within a specified amount of time (generally three to six months) all special, low interest rates will be readjusted to the penalty APR.
And-surprise!-the penalty APR isn't always as nice as your original deal! It is not uncommon for penalty APRs to bounce a credit card holder's APR in the 20%s. Pay your monthly credit card bills on time, every time. Don't let your penalty APR ruin your low interest rate! If you have trouble making your payments on time, consider setting up an account online; most major credit card companies allow you to transfer money from your checking account directly into your credit card account online. And if you have trouble remembering, automativ bill pay can keep your payments timely and your APR premium.
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