Why is the APR Important to You?

You've probably heard that it's important to compare credit cards and their features when you're planning to apply for a credit card. You likely have heard the term APR, and may even know that it means Annual Percentage Rate. When you compare credit cards, APR is a sort of measuring stick by which you can judge how much more one card will cost you to use than another - but precisely what is the APR and why is it important?

There's a reason that the interest rates charged by credit card companies must be expressed as annual percentage rates rather than monthly percentage rates. At one time, there was no standard way of expressing interest rates. When you tried to compare credit cards or loan rates, you might find yourself comparing one credit card's monthly interest rate with another's annual rate and yet another expressing the interest rates charged in an entirely different manner. Expressing the interest rate charged as an annual figure gives you the most accurate picture of how much you're paying in interest when you make a purchase using a credit card.

In general, to figure your monthly finance charge - and you'll only get a close estimate of it because some months you'll be paying interest on interest charges and fees - you multiply the amount financed by the interest rate, then divide by twelve. That's how much you'll pay each month on the amount of your purchase. But some months you'll have paid part of that balance down, and some months you'll have charged a few more things, and other months? you see how complex it can get to compare credit cards without a common measurement standard. The APR gives you that.

On the other hand, the APR is not the only thing to check when you compare credit cards. Some cards charge you a fee when you apply for a credit card, or an annual fee for using their credit card. Some cards charge you to make enquiries into your account, or slap you with a fee if you use an ATM to take withdraw cash or any other number of reasons. The APR is only one way to compare credit cards, and when you're looking for the best credit card, it's important to measure it for a good fit all around. If you seldom carry a balance on your credit card, for instance, a card that charges £20 annual membership fee to get a 6.8% APR may end up costing you more in the course of a year than a card that has no membership fee and 8% APR.

When you compare credit cards at moneyeverything.com, you can take a comprehensive look at all the features and fees of all the credit cards that you're considering, not just the APR. Take the time to compare credit cards at moneyeverything.com so that when you apply for a credit card, you'll know that it is the best credit card for you.