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Topic New to Credit Cards
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By Confound
On 01/25/01
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Is APR different from Interest Rate? The card I'm thinking of getting says it's interest rate is Prime + 7.9%, and APR is 17.4%. No annual fee. Say I put $100 on it, and let the balance roll over to the next month...how does Interest and APR figure into what I would owe?
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By colin
On 01/25/01
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APR stands for Annual Percentage Rate, which is basically the interest rate used to calculate your monthly finance charges. The annual rate is broken down to a daily interest rate and multiplied by the calculated balance.
In your example of carrying $100 from one month to the next, you would be charged the daily interest rate X $100 for the days you carried the balance. If you want to assume you charged the $100 at the beginning of the month, the calculation would be easier your interest charge would be $100 X APR/12months = $1.45
Your balance would be $101.45
You can avoid finance charges by paying off your balance in full each month.
Good Luck!
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your questions are answered by the gromco team and card users like you
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