Your credit matters: understanding your APR


(ARA) - You might find the acronym confusing, but the APR (annual percentage rate) on your credit card is a number you should be familiar with. It's important because it describes the cost of your credit balance on a yearly basis. A healthy understanding of what determines this rate can help improve your financial decisions. Here are some tips to educate yourself about your credit card:

  1. Make sure you know how much you are paying in interest and how it is calculated. Some cards calculate APRs, while others do periodic rates (a monthly finance charge or a daily charge).


  2. The account agreement tells you if your card has a variable or fixed APR. Variable means that the interest rate can fluctuate up or down from the set amount. Fixed APR rates don't fluctuate in this way, but they are not guaranteed - they can be changed based on market conditions.


  3. It might always seem that having a lower APR is better, but not if you pay your balance off every month. If that's the case, then you should be more interested in other fees like cash advances or annual fees.


With a little creativity this holiday season, you can keep your spending down and not feel frazzled.

To learn more on how to responsibly manage your credit, visit www.BankofAmerica.com/learn.

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