One of the keys to make sure that you never have to worry about what affects your credit or how to improve your credit is never having to get yourself in that situation that being said debt and having too much debt and what kind of debt is usually what gets people in trouble. Its pretty had to stay out of debt and some times credit cards can be that necessary evil that we just have to learn how to manage and control, part of that is understanding the kind of interest you may be paying when you get a credit card so you know what you are dealing with.
Let’s just get into the basics.
Annual Percentage Rate
The interest rate (Annual Percentage Rate) is the sum specified in percentage expression to a credit amount which the credit receiver pays for using it counting on the certain period (month, quarter, and year). This in simple terms is what it is costing you to have credit with that credit card company or loan, basically what it costs you to borrow money over a year.
For example, 5 percentage quarter rates is equal to 20 percentage annual rate,, so for every $100 dollars you borrow it will cost you $20 over that same year.
Interest rates are usually estimated in relation to:
* to the sum on which purchasings are made; sometimes the more you borrow the less it cost its kind of like buying in bulk .. but its money.
* to the sum of monetary advance (cash withdrawal); the more and faster you want money the more its going to cost you like going to a convenient store
* to the sum of the translated balance sheet from other card. pretty much the more business you bring over from one card the more they are willing to give you a better deal.
Annual interest rate on purchasings (APR for purchases). The rate is applied to the total sum of what ever it is that you purchased with the given credit car, when that says total it may cost $100 but do not forget taxes and if you bought the extended warranty on that TV you will be paying interest on that too.
Annual interest rate on the transfered balance sheet (Balance Transfer APR), the rates extends for the sum which has been transferred from one credit account to the other. Annual interest rate for the total sum of monetary advance (Cash Advance APR) it is applied to the sum which has been drawn from account in the form of cash. So if you do any kind of transferring do not forget to add what it costs to do that if your bank or credit card has any fees for doing that, you will pay interest on that as well.
The multi-level interest rate (Tiered APR), this is rate changes as the size of the balance on the card changes. For example, 16 % is charged when the balance is from 1$ to 500$ and 17 % on the balance over 500 dollars. Before recent changes you were just hit with these now you have to be notified which is good no more surprises but when you do sign up for a new card you have to really read your account information to see how it may apply to you.
Application of the penal interest rate (Penalty APR). Lets say a payment arrives more than two times late during the period of six months, the creditor has the right to apply punishment in the form of an interest rate increase? Basically because you are continuously late you are no longer a good client and more risk.
Annual interest rate at a preferential induction period (An introductory APR). Such interest rate will be applied to the account till certain time. For example, the annual interest rate can equal 0 % with period of validity of the offer lets say for 6 months or something. But after the expiration of this term the rate which is specified will be applied to the entire balance. PAY ATTENTION ON THIS PART. Some companies will apply the interest rate of the entire term all at once so if for the last 6 months no interest charges have been applied and there is still an outstanding balance of any kind they will take all those interest rate charges that you did not have to pay and slap them on all at once so beware. Other companies will just start from that day the 6 months are over and no big deal which makes things much more easier manage but its up to you know what kind of deal you got yourself into.
Also keep in mind that the interest rate on cash withdrawal always is considerably higher than just regular purchase transactions.
Different types of penalties or fees:
Under certain circumstances credit companies levy a payment from the client.
The annual installment (Annual Fee) is basically the annual fee for just having the card. Now only about 20 % of credit establishments establish an annual installment, on the card automatically and it becomes something you owe and you can have a zero balance since you have not used your card, and then you owe that $20 annual fee and if you do not pay it with late fees and interest you can easily see that grow to $100 and then before you know it your credit scores are dropping. Been there done that.
Payment for cash withdrawal of money (Cash Advance Fees). The credit companies also establish a certain payment at cash withdrawal from the account (through an ATM, for example), and they do charge extra for that little service so only do it if you really gotta do it.
For those who are looking for a place where to find out about credit reports, are welcomed to visit this credit report monitoring site – there is much information about credit monitoring and how to order the service.
The importance of your score will become very apparent when you apply for a loan whether it be to buy a home or a car loan. Even credit cards will charge someone double the amount of interest to someone with bad credit vs someone with good credit. If you want to have your dream home within reach and an affordable car loan best thing is to keep your credit score healthy. If your score is not at its best then the best thing to do is to get your score up you just need to do the work and learn the systems. What ever system you use to help fix your bad credit keep in mind it well require you to learn a few things and require work on your part but it is do able, and learning how to fix bad credit can be a reality for you if you are willing to learn and do some work.