If you are struggling to pay off credit card fees and interest rates due to accumulated penalties, interest, and fees, you are not alone. Using credit cards offer convenience and numerous benefits. You can make payments without the need to withdraw cash using cash advance facilities and indulge money you don’t have yet. However, good things are not free. In return for facilities and conveniences, credit card incurs charges and fees including cash advance fees, over limit fees, credit card interest fees, and later payment fees.
With a credit card, APR or Annual Percentage Rate is known as an interest rate. APR is an effective interest rate you would pay once you borrow money on credit cards for a year.
Credit cards are a kind of loan. If you use credit cards, you are borrowing money until you are done paying the bill. Since it is a loan, you can expect to pay interest always. But, with majority of credit cards, you may avoid paying interests completely.
A lot of credit cards have various APRs. These include the following:
- Introductory APR
There are credit cards that offer low APR. Frequently, it is zero percent for a limited time after opening credit cards. It could be for balance transfers, purchases or both. It is introductory since the special APR lasts only for a limited period of time.
- Balance Transfer APR
If you transfer balances from a certain credit card to another, it’s the APR you will pay for the debt. There are times that it is the same as Purchase APR, yet it can be different. Majority of banks begin changing interests on balance transfers.
- Purchase APR
It’s the APR that credit card companies charge on every normal purchase. Sometimes, it is known as regular APR. Many cards have grace period. It means they do not charge interests on purchases once you pay credit card bill on time as well as in full monthly.
- Cash Advance APR
Once you use credit card to withdraw money at ATM, you will pay the rate. Usually, interest charges begin the day the money is withdrawn, so there is no grace period. Oftentimes, APR is higher than Purchase APR and thee are typically some fees aside from the APR.
Below are some of the ways to avoid paying interest on your credit card:
Know Your Outstanding Balance’s Due Dates
It is easy to forget when the outstanding balance has to be settled, particularly if you hold different cards. Keep your own calendar to remind you of the dates. Other banks give a grace period where you could settle your bill beyond due date without paying additional charges.
Always Pay in Full
There is no simpler way to avoid such fees through paying credit card bills in full and on a timely manner. If you can’t, try paying the minimum payment amount to avoid some unnecessary interest charges and penalties. You have to be reminded that banks require credit card users to pay extra fees for paying below the outstanding balance’s minimum fee.