Applying for credit, even if you don't get accepted for a new card, can hurt your credit score. Each time you shop for a new credit card, lenders see you are shopping for credit, and this can hurt your credit rating. Knowing the interest rates of cards before you apply will help you avoid applying and being accepted for cards that offer surprises you didn't anticipate.
Determine the annual percentage rate or rates, or APR, for the card. The APR is percent of interest you will pay on balances during the course of one year. The APR will appear in the disclosure statement on the card issuer's website, on any promotional offers and on your bank statement. The APR on one credit card might be different for balance transfer amounts, withdrawals, promotional periods and penalties.
Locate the APR for balance transfers. If you transferred a balance when you opened the card, or anytime after, look for the APR on balance transfers. Your credit card statement should show the amount of any transfers and the APR next to those balances. Multiply the amount of balance transfer on your card by the APR to get the amount of interest you will pay annually. Divide that amount by 12 to get your approximate monthly interest charge. This amount will vary each month, since some months have more days than others, and since your balance may go up or down as you add new charges or make payments.
Locate any other APRs you may have. Your statement might show a section with several headings, such as, "Type of Balance," "Annual Percentage Rate" and "Balance Subject to Interest Rate." Under those headings, you may see, "Purchases," "Cash Advances" and "Balance Transfer." Multiply those balances by their APRs and divide by 12 to get the approximate monthly interest charges for those balances.
Read the back of your credit card statement or disclosure forms on the card issuer's website to find all of the interest rates for the card. If the card has a variable interest rate, you will see how that is calculated. Variable rates are often tied to the prime rate set by the Federal Reserve.
If your interest rate goes up after a six-month or other promotional period ends, you will find the promotional rate and new interest rate. If your card carries a penalty rate that goes into effect if you are late with or miss a payment, the information will be there. Many card issuers rescind your promotional rate, including 0 percent offers, if you miss or are late with a payment.
Items you will need
- Credit card statements
- Credit card disclosure statements
- Credit card promotional offers
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