Interest Rates

You may think that credit cards are offered to people for a convenience when the primary reason for them is to generate money to financial institutions that issue them. The credit card companies post interest rates in terms of an APR (Annual Percentage Rate), this APR that they offer from card to card.

As a consumer you should be trying to find the card with the lowest possible interest rate that you can. There are so many differences in the way interest can be compounded on the credit card that you receive. This compounded interest can affect the cost of the money you are borrowing. Interest can be compounded daily or monthly and credit card companies have different ways in which they calculate the balance on which the interest can be applied.

Your credit card debt is called revolving debt because interest that is earned on a principle balance is added back to the balance on which interest can then again accrue. A simple way this is put is the credit card companies earn interest on interest which makes paying off the balances of the credit cards a very costly and timely process for you and in turn very beneficial for them. Still thinking credit cards are a convenience?