Credit cards feature various types of annual percentage rates

Credit card interest rates are commonly encountered by residents of Southaven, but not everyone understands the different types of rates and their financial implications. As some local residents may know, credit card debt has a way of quickly getting out of hand; at that point, it may be necessary to take decisive steps, such as filing for bankruptcy, in order to take care of the debt. Still, it’s helpful to understand credit card interest in order to avoid or resolve issues with credit card debt.

In its most basic form, credit card interest rates are the price a person pays for a credit card’s borrowing capability. With most credit cards, the interest rate is a yearly rate known as an APR, or annual percentage rate. However, one credit card account can sometimes feature more than a single APR. In such cases it is often different types of transactions, such as purchases versus balance transfers, that have different APRs. Moreover, one APR may vary over time, such as a promotional rate that later changes to a higher rate after a set period of time.

In addition to multiple APRs and APRs which change over time, there are also variable and non-variable APRs. It’s important to know that both types can actually vary – non-variable APRs, though, generally require notification before the rate changes. With variable APRs, the rate usually changes based on an index known as the U.S. Prime Rate.

One can generally avoid paying the APR if a credit card’s balance is paid in full each month. Still, this may not be possible for many credit card users. Especially in today’s economy, with unemployment and stagnant wages a concern for many, delinquent payments can be a huge challenge. For those with mounting credit card debt, interest rates may only be compounding an existing financial problem. A Mississippi bankruptcy attorney can offer insight and advice regarding the most effective ways of tackling credit card debt and dealing with creditors.

Source: Consumer Financial Protection Bureau, “What is a credit card interest rate? What does APR mean?” accessed March 29, 2015

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