# Don’t Let a High APR Put You in the Red

If you’re carrying a balance on your credit card, you’re probably paying a high interest rate. Here’s how to get that rate under control.

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## The Basics of APR

APR, or annual percentage rate, is the amount of interest you’ll pay yearly on any money you borrow. The higher your APR, the more you’ll end up paying in interest over time. That’s why it’s important to understand how APR works and how it can impact your finances.

### What is APR?

Annual Percentage Rate (APR) is the yearly rate of interest that is charged on an outstanding credit card balance. This rate is determined by the card issuer, and it can be either fixed or variable. Fixed APR means that the rate will not change during the life of the account. Variable APR means that the rate can change at any time, generally in relation to an index, such as the Prime Rate.

The APR is important because it determines how much interest you will pay on your outstanding balance if you carry it over from month to month. The lower the APR, the less interest you will pay. However, keep in mind that a lower APR does not necessarily mean a lower monthly payment. Your monthly payment is determined by your account’s balance, interest rate, and payment schedule.

### How is APR calculated?

Annual Percentage Rates (APR) are the cost of borrowing money for one year, including interest, fees, and other charges. The APR gives you a good way to compare different offers and find the one that’s right for you.

For example, let’s say you’re considering two different credit cards. One has an introductory APR of 0% for six months followed by an APR of 16.99%. The other has an APR of 14.99% from the start. If you borrow \$1,000 from each card and pay \$100 per month toward your balance, the card with the 0% APR will save you \$60 in interest over the course of six months.

But what if you can’t pay off your balance within six months? In that case, the card with the lower ongoing APR will be less expensive. To calculate the total cost of borrowing, use our credit card calculator below.

## The Dangers of High APR

The annual percentage rate (APR) is the yearly cost of borrowing money, including any fees, expressed as a percentage. The APR is a great way to compare different loans and credit cards because it includes both the interest rate and any fees in a single number. For example, a credit card with a 20% APR would have an annual interest rate of 20%, plus any additional fees.

### How can high APR put you in the red?

If you’re not careful, a high APR could put you in the red financially. Annual percentage rates (APR) are the interest rate charged on a credit card, loan, or line of credit, and they can range from 0% to over 30%. For example, if you have a credit card with a 20% APR and you carry a balance of \$1,000, you’ll end up paying \$200 in interest charges over the course of a year.

If you’re already struggling to make ends meet, a high APR can make it even harder. It can also put you at risk of defaulting on your debts, which can damage your credit score and make it difficult to get approved for loans in the future.

There are a few ways to avoid high APRs. One is to pay off your balances in full each month so that you’re not paying any interest at all. Another is to transfer your balances to a low-interest credit card or take out a personal loan with a lower APR. You should also make sure to shop around for the best rates when you’re taking out new loans or lines of credit.

### What are some ways to avoid high APR?

There are a few things you can do to avoid being charged high APR. One is to make sure you always pay your credit card balance in full each month. This way, you’ll never be charged interest. Another is to avoid using your credit card for cash advances, which usually have very high APRs. Finally, you can try to negotiate a lower APR with your credit card company. If you have a good payment history with the company, they may be willing to lower your rate.

## The Benefits of a Low APR

An APR, or Annual Percentage Rate, is the interest rate you’re charged on a loan. A low APR means you’ll pay less in interest over time, and it can also help you get out of debt faster. Here are some more benefits of a low APR.

Your APR is the interest rate you’ll pay on your credit card balance if you don’t pay it off in full each month. So, if you have a balance of \$1,000 and an APR of 15%, you’ll owe \$150 in interest at the end of the year. But if your APR is only 5%, you’ll owe just \$50 in interest.

Assuming you make no other changes to your spending or repayment habits, a lower APR can save you hundreds of dollars each year. If you carry a balance from month to month, a lower APR can help you pay off your debt faster and save money on interest payments.

For example, let’s say you have a credit card balance of \$5,000 and an APR of 15%. If you make minimum payments of 4% of your balance each month (\$200), it will take you more than 25 years to pay off your debt and you’ll end up paying nearly \$6,000 in interest. But if you have a lower APR of 10%, it will take less than 19 years to pay off your debt and you’ll save more than \$3,000 in interest.

Of course, the best way to save money on credit card interest is to pay off your balance in full each month. But if that’s not possible, a lower APR can be a big help.

### What are some ways to get a low APR?

There are a few key things you can do to make sure you always get a low APR:

– Shop around. Don’t just go with the first offer you get. Compare APRs from multiple lenders to make sure you’re getting the best deal.
– Pay your bills on time. Lenders are more likely to offer lower APRs to borrowers with good credit histories. So, if you have a history of making late payments, now is the time to start changing your ways.
– Keep your balances low. The lower your balances are, the lower your APR will be. So, if you have high balances on your credit cards, start working on paying them down.
– Use balance transfers wisely. Balance transfers can be a great way to get a lower APR, but only if you use them wisely. Make sure you understand the terms of the balance transfer before you make the transfer, and always pay off the balance before the intro period expires.
– Avoid cash advances. Cash advances almost always come with very high APRs, so it’s best to avoid them if at all possible

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