Compare Credit Card Programs
A delayed APR. A different rate will apply in the future. For example, a card may
advertise that there is Ðno interest until next March.“ Look for the APR that will be in
effect after March.
If you carry over a part of your balance from month to month, even a small difference in the
APR can make a big difference in how much you will pay over a year.
Fixed vs. variable APR
Some credit cards are Ðfixed rate“--the APR doesn’t change, or at least doesn’t change often.
Even the APR on a Ðfixed rate“ credit card can change over time. However, the credit card
company must tell you before increasing the fixed APR.
Other credit cards are Ðvariable rate“--the APR changes from time to time. The rate is usually
tied to another interest rate, such as the prime rate or the Treasury bill rate. If the other rate
changes, the rate on your card may change, too. Look for information on the credit card
application and in the credit card agreement to see how often your card’s APR may change
(the agreement is like a contract--it lists the terms and conditions for using your credit card).
How long is the grace period?
The grace period is the number of days you have to pay your bill in full without triggering a
finance charge. For example, the credit card company may say that you have Ð25 days from
the statement date, provided you paid your previous balance in full by the due date.“ The
statement date is given on the bill.
The grace period usually applies only to new purchases. Most credit cards do not give a grace
period for cash advances and balance transfers. Instead, interest charges start right away.
If you carried over any part of your balance from the preceding month, you may not have a
grace period for new purchases. Instead, you may be charged interest as soon as you make a
purchase (in addition to being charged interest on the earlier balance you have not paid off).
Look on the credit card application for information about the Ðmethod of computing the
balance for purchases“ to see if new purchases are included or excluded. Information on
methods of computing the balance is in the section ÐHow is the finance charge calculated?“
How is the finance charge calculated?
The finance charge is the dollar amount you pay to use credit. The amount depends in part on
your outstanding balance and the APR.