Credit Tools – Credit Card APR Calculator

There are all kinds of calculators available for practically anything you would ever want to calculate, and a Credit Card APR Calculator is no different.  If you find yourself researching the varied and multifarious credit card options available in our globally driven credit economy, you undoubtedly are familiar with the term APR, or Annual Percentage Rate.

It is a common misnomer that all APR’s are created equal.  In fact, this is one of the most misunderstood characteristics of many of the credit card products available in the financial markets today.  This simple truth is, if you don’t understand how the APR is calculated on the credit card you are considering, you could be in for a big surprise.   You’ll be amazed at how quickly interest will compound especially if you don’t pay your balance in full every month.  And that is just what the credit card companies are hoping for.

APR is calculated on a yearly term, simple enough, but be aware one credit card can potentially have several different APR calculations, which can widely affect the amount of money you are required to pay each month to remain in good standing.  Keep in mind; you should ignore the minimum payment requirement, as we have stated in other articles on this site, and pay as much as you can or better yet pay off your credit card bill each and every month.  Unfortunately, if you are like many and can’t pay your bill in full every month, ensure you keep your APR to the lowest possible level by understanding the terms and conditions that can affect APR.  American banks and other lending institutions are amount the largest in the world and their APRs can change frequently based upon the Federal Reserve Rate.  You can find out what the current rates are by either calling the card issuer directly or visiting their web-site.

Using a Credit Card APR Calculator

A credit card APR calculator is a great tool for the visual representation of the APR rate you will pay on a credit card for any purchases you make in which you do not pay the balance in full at the end of the term, typically 20 or 30 days after purchase.  As mentioned previously, there are different APRs a particular issuer may use to calculate the interest on your purchases.

• Some cards will have an applied APR for purchases, another for cash advances, and yet another for balance transfers.
• In most circumstances the APR for a cash advance or a balance transfer will be significantly higher, but not always.
• Some cards will calculate the APR based on purchasing levels.
• For example you may have a $2000 balance on your credit card and the issuer may charge you 12% for balances from $1 to $500, 14% for balances from $500.01 to $1500, and 18% on anything above $1500.

Additional APR rates may apply, such as a penalty rate, should you fail to make your payments on time.  This is important as many issuers will change your rate after only one or two late payments in any given one year time period.  This is an important characteristic unique to credit cards and it is important to understand as you’ll receive no grace period when making your payments.  If creditor does not receive your payment by the due date, you could suffer an APR increase after just one late payment.  Many consumers complain or claim there should be a grace period similar to a home loan or a car payment.  Typically these loans offer an extension or “grace period” after the due date before applying a late fee, but unlike a credit card company, they cannot change your interest rate.  So be sure you understand when your payment is due each month to avoid this credit card caveat.

Teaser rates are another APR calculation you need to consider when selecting a credit card.  Typical teaser rates often start very low, typically for only a few months, but there are introductory rates that can last as long as a year, perhaps longer.  Just be sure you know how long the low rate will last before taking advantage of this type of credit card offer.  Teaser and introductory rates can be a good way to pay off debt accrued on a higher interest credit card, just be sure you understand the terms before using the card to payoff other high interest debt to avoid other unexpected and high rate fees associated with doing so.

A Credit Card APR Calculator can help to shed light on how much that credit card might really cost you in the long run and guide you in making the best choice for you next credit card.