Know the Lingo! What Does APR Stand For?
You might know that it’s your interest rate and that after that introductory period, that number’s going to go way up. But how many of us know what APR actually means?
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00:00You hear it in every credit card commercial, 0% APR for the first X number of months.
00:10And you might know that it's your interest rate, and that after that introductory period,
00:13that number is going to go way up.
00:15But how many of us know what APR actually means?
00:18Well, it stands for annual percentage rate, so that large rate is expressed for the whole
00:22year.
00:23So, if it's a 24% APR, divide by 12 and your monthly rate is 2%.
00:28But there are different kinds, too, on top of the introductory APR.
00:31There's also the purchase APR charged on, you guessed it, the things you buy.
00:35The balance transfer APR, which might be the same as or higher than the purchase APR.
00:40The penalty APR on late payments that may be higher than normal.
00:43And the cash advance APR, which tends to be on the high side and charges you interest
00:48right away, according to CNBC.
00:50The quickest way to avoid having to know much more about it is to pay off your balance each
00:54month.
00:55You can also potentially reduce your APR by calling your credit card company and negotiating,
01:00though you should make sure your credit score is in decent shape first.