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What is APR?
In selecting a credit card, the APR (annual percentage rate) will generally have the biggest bearing on your decision. Simply put, it tells you the amount of interest you will be required to pay for the privilege of borrowing the credit card issuer's money to pay for your purchases. The APR the card issuers offer you can vary widely, therefore it important to do your research and find the best deal for you. Taking the time and effort to do this can save you a lot of money in the long term.
The APR you will be offered on a credit card is based partly on your credit history. Unfortunately this means that if your credit history is very poor you will be penalised, and a card issuer will usually only be willing to offer you a credit card at a very high APR, as you will be considered a high risk for lending their money to. Conversely though, a good credit history puts you in a much stronger position for shopping around and getting a good deal.
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Typically, the best deal for most people is 0% APR. This means that if you transfer an existing balance to a new card you will not have to pay further interest charges. However, this is generally only an introductory rate. If you are planning to pay off your entire debt before the introductory offer expires then this sort of card is ideal for you. Some cardholders consistently transfer their balance to a new 0% APR card upon the end of this introductory offer, in order to prevent ever paying interest on their purchases.
If you do not want the hassle of repeatedly transferring your balance from card to card and you do not have the financial means to pay off your balance within a relatively short space of time, then you may want to reconsider a card with 0% APR. Ask the credit card issuer about the full terms of the card - how long the introductory offer lasts and what you can expect to pay in interest after this date? If once the introductory period has expired you will be paying is very high interest rate, look at alternative cards. A card with no introductory special offer but a consistently low APR will be a much better deal and save you more money in the long term.
It is important to also take into consideration that a credit card issuer can penalise you for late payments. This, of course, usually only entails a late payment fee on your next statement. However, if you are frequently unable to make payments on time then the card issuer is also within their rights to raise the APR on your credit card.
It is tempting, for the sake of convenience, to take the first credit card you are offered. However, spending just a couple of hours researching all the options available to you - whether that entails browsing online or calling credit card issuers and asking for information on the deals available to you - will most certainly pay dividends in saving money on your credit card purchases, and will be time wisely spent.
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