When it comes to credit cards, one of the most infamous ‘features’ is the APR, which can be ridiculously high in some cases and managing to reach an average of 16.75 percent. According to LifeHacker, citing a recent report from CreditCards, this new average is actually a record!
And this is not everything, since you need to make just one payment misstep and you can face even double this rate for a lot of months afterward.
Avoid being late on payments
The same source mentions that if you’re more than 60 days late on your minimum payment, your credit card issuer can apply a “penalty APR,” which could reach a ridiculous percent of 29.99. Also, it’s worth mentioning that this higher rate can be applied to both your current and future balances, for the next six months.
Right after this period is over, your creditor will eventually reevaluate your rates. Obviously, if all the payments have been made on time during this period, your APR will return to normal.
The APR varies from issues to issuer
If you want to find out what your card issuer charges, it’s mandatory to go through all your card’s terms and conditions. Not every card issuers applies penalties though! For example, variants from Chase, Citi, or Discover have offers for cards with no penalty APR, but they do have stricter requirements.
No matter what card you have, it’s highly recommended to always keep track on your payments and make sure they are always made on time or even earlier. This can be done by setting recurring payments or making a calendar reminder just when your bill is due.
Finally, there’s one more important aspect we need to cover: in order to keep your baseline APR, you must make at least the minimum payment. However, our recommendation is to always try paying off your entire bill. By this you can avoid falling into debt, which is by far the maine negative aspect of owning a credit card.