Low APR - Making The Most Of It

How do you go about getting a Low APR credit card? In this article we will take a look at a this. But before we do, let us look closely at APR and what it means.

APR is an abbreviation for annual percentage rate. This is the effective rate of interest at which someone will have to repay a loan or a credit facility. It takes into account fees and is the total cost of the loan or credit facility to you the consumer, expressed as an annual percentage of the loan or credit given. This makes it easy for you the consumer since all you need to do is compare what each lender is offering by looking at the APR or the cost of the loan to you. You will of course want to select the credit facility with the lowest APR. This however, may not be best and we'll see why in a while

Low APR credit facilities are generally made available to persons who are considered least risk in defaulting payments. These would be persons with high credit scores and who do pretty well in managing their personal finance. The reverse also applies in that persons who are at highest risk of defaulting in payment would normally be granted credit facilities with the highest APR. If you fall into the first category then kudos to you. You have done well. If however, you fall into the latter, then all is not lost. You will simply have to work harder at building your reputation to effectively manage your finance, while possibly settling for higher APR credit. Here are some pointers to keep in mind as you go along:

• Budget and budget well! Plan your finances. Manage your expenditure. Balance your net income with your spending. Create a realistic budget. It makes no sense creating a budget that you can never work with.

• Do not try to keep up with the Jones'. They have their financial reality to deal with and so do you. Know the difference between your wants and your needs. Do not try to live beyond your means. Discipline yourself into focusing on your needs.

• Know who your debtors are. Avoid late payments or skipping your payments. This is a great recipe for financial suicide. If possible, try to consolidate all your payments into one that is more manageable.

• Save! No matter how small your income may be, always try to put aside a little for a rainy day.

Now because credit cards would normally have a host of perks attached to them, the one with the lowest APR may not necessarily be the card that you stand to gain the most from. Apart from the low APR, you should also look at the rewards being offered by the card. Since these rewards are directly linked to spending, you need to know your spending habits. If for example, you use your car a lot, and you have a choice of two credit facilities - let's say one at 7% and the other at 8% APR - then at a first glance, you might be tempted to select the one at 7%. If however the lower APR card offers points on the purchase of say electronics, while the higher offers rebates on gasoline purchases that will amount to a substantial savings each year, then that may significantly alter your decision.

To conclude, when looking for a low APR credit card, also look at the rewards that are being offered. As long as you know yourself and your spending habits, making the best choice will become second nature.