| Have you looked at the ads for credit cards? If you | | | | fee and perhaps other penalties depending on the |
| have with even minimal attention you will know that | | | | terms and conditions of your supplier. |
| one of the most prominent things they display is the | | | | So you can pay the minimum amount specified, or |
| APR, or the credit card rate. Lots of people simply | | | | the whole amount, or any amount in between. The |
| choose the card with the lowest APR rate, which is a | | | | important thing to understand is you will NOT be |
| good first step. It is correct that the APR of your | | | | charged any interest if you make full payment. |
| credit card is one of the most important factors you | | | | But, if you do not pay off the whole amount, you will |
| should consider when choosing your card (although it | | | | pay interest charges on the amount left. This interest |
| is not the only one). So, if you do not understand the | | | | will be added to your next bill. The interest you will |
| APR you really should start improving your personal | | | | be charged is that you agreed to when you signed |
| finance basics by gaining a proper understanding of | | | | up for your card. And compared to, say, a bank loan, |
| them. | | | | the interest, or APR, is very high. |
| The APR on your credit card is the rate if interest | | | | So it is possible to start a spiral of debt in this way if |
| your supplier will charge you on the amount you owe | | | | you do not know how these things work. Always |
| them. So obviously, the lower the APR, the lower | | | | borrowing on your card without paying it off each |
| your payments, unless you pay off your card in full | | | | month will accrue high interest charges which you will |
| each month. If you do clear your card monthly, the | | | | have to pay eventually. |
| APR will not be as important as it is to those who do | | | | Do not misunderstand me here. I am not saying you |
| not clear their cards each month. | | | | should never use your card if you cannot pay it off |
| Each month your card supplier will send you a bill | | | | in full at the end on the month. I am saying your |
| stating the full amount you owe them and the | | | | personal finance basics should be good enough to |
| minimum payment you must pay by the due date. If | | | | inform you when you can do this and when you |
| you do not meet this date you will be charged a late | | | | should look for another source of funds. |