Low APR credit cards are often touted as the best option for anyone who is looking for a way to save money on their credit bills. Unfortunately, not a lot of people understand how these cards can save them money.
Every credit card has an annual interest rate that it charges the balance left over on a card at the end of every month. This rate is called the APR, and it is the crucial number that determines how much interest you pay. A maximum rate of 30% is the highest APR allowed in the United States, while some cards offer a rate of zero percent for a few months just to get people interested in getting a new credit card. Typically, cards that offer rates below ten percent are considered low APR credit cards.
In order to save money with one of these cards, a person can transfer a balance from a card with a high APR to a card with a low APR. This pays off the old card and allows the borrower to pay less interest and a lower minimum payment every month. Many people also use low APR cards to finance large purchases such as car repairs and home improvements. This allows them to pay very little in interest on an item that they need, essentially breaking up the purchase into a lot of smaller payments.