What does annual percent rate mean? If a credit card charges a higher APR with a minimum finance charge of $0.50, with variable percentage being added to the Prime Rate ?
What is a cash advance that adds APR percentage to a credit card membership?
Basically, I’m trying to find out how much it will cost me money to use this credit card alone. It claims all these benefits such as 3% back for dining out and stuff.
Tags: About, Question, Card, minimum finance charge, credit card questionRelated posts:
APR is basically the interest the credit card company charges on an ANNUAL basis of unpaid balances. For instance. Let’s say that I have a credit card balance for a month and only pay off the minimum. The remainder of the balance will accrue an interest charge which is basically money the credit card collects for granting me use of their money (credit cards are liquidity tools). The APR, though, will be divided up depending on how often that card computes interest (such as APR/4 if quarterly compounding or APR/2 if semi-annual). Hope this helps.
Annual percentage rate (APR) is what the card company charges you per year for borrowing money (charging to the card). Usually card companies computer interest daily, so for example, if your APR is 9.99%, a pretty good approximation of monthly interest is (9.99/100) / 365, that is daily, then times 30 days or so. In very simple terms, a card with $1000 balance on it will be charged roughly $100 per year with 10% APR.
Minimum finance charge means even if you charge only a small amount, like $5.00, where you interest would be very small, they will charge you at least $0.50 in interest.
Cash advance means you actually take out cash with the card, like an ATM, and is usually a lot higher APR, like 25% (this will be a pain to pay off, do not use this).