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One such important type of credit card is the Low APR or low interest credit card. This type of card is advantageous for those customers who like to have extended period of time in order to pay back their credit.
APR or “annual percentage rate” is the cost of credit that is levied by the card issuing company as a yearly interest rate. APR is calculated on a monthly basis on the current amount in the card. The monthly interest is calculated as if the current balance on the card would remain the same for the entire year. The amount is then divided by 12 to give a monthly interest.
There are usually two different types of low interest credit cards that include variable and fixed. The card issuing company might offer a lower APR in the form of introductory offer for a specified period of time and then change it to a higher interest rate. Otherwise, the company might also have low APR on the credit card as a fixed rate.
Low APR credit cards are ideal for those people who have a tight financial budget. These people take advantage of low APRs to make larger purchases so that they can take several months to repay the credit.
Low APR credit cards help in saving customers a good amount of money in the form of interest rates. However, one needs to be really careful while choosing a low APR credit card. In case of fixed low interest rate cards, it is important to enquire about other charges like late fee penalties, annual charges and optional payment protection insurance.
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