Archive for December 2010
What Does APR Mean?
If you’ve ever bought a house or a car, or you’ve made any type of purchase with a store or credit card, then chances are, you’ve come across the term APR.
APR is simply an acronym for ‘Annual Percentage Rate’. When you’re shopping for finance, whether it’s for a car loan, mortgage or credit card, the APR is there to guide you during your search for the best loan on the market.
Legally, all banks and lenders must provide consumers with information about the costs and terms of a loan, under the Truth in Lending Act. The intention of the Act is to help consumers fairly compare the different loans offered by various financiers, so they can make a decision without being misled or deceived.
Although it sounds simple, the APR is actually based on quite a complex mathematical formula. Essentially, it is a measure of the cost of credit, expressed as a yearly rate.
The APR reflects the amount of money being financed, the interest rate, the timing of the payments, and any other fees and charges – such as administration costs and broker charges – that are associated with the loan. It would be nearly impossible for consumers to compare all of these costs with multiple lenders on their own, hence the APR.
Because the APR takes into consideration all of the various fees and charges associated with your loan, it is almost always higher than the actual interest rate attached to the loan.
For example, if you have a fixed rate mortgage, the following could apply:
Initial interest rate: 8%
Loan term: 30 years
Loan amount: £90,000
Total prepaid charges: £2,673
APR: 8.3205%
(Example source: charterfinancial.net)
When advertising any form of credit, the law requires that lenders ensure that the APR is shown more prominently than any other rate advertised on the page.
If you have a fixed rate loan, the APR cannot change during that fixed period. If you’re loan is attached to a variable rate, however, you have no guarantees that the APR will remain the same during the life of the loan. This means that if your bank raises its interest rates, the APR on your home loan or credit card will also go up – but if the bank cuts its interest rates, your APR will likely go down.
If you’re looking for any type of loan, comparing credit card APRs, for example, of the different products available is often the best place to start, but it’s important to read the small print and consider all aspects of the loan, rather than simply taking the deal with the lowest APR. Every loan has its own set of conditions, penalties and restrictions, so the cheapest rate may not always be the most suitable product for you and your situation.
Related to : www.vanguard.com www.ziprealty.com www.scorecardrewards.com
Balance Transfer Credit Cards FAQ
When it comes to using balance transfer credit cards, many consumers are filled with questions and concerns. While there are many benefits to using a balance transfer credit card, it is always best to have these questions answered and the concerns satisfied before moving forward with applying for one of these cards.
How Can Balance Transfer Credit Cards Save Me Money?
Balance transfer credit cards can save you money by reducing the amount of finance charges you pay every year. If you transfer even a small amount of money, such a $1,000, from a card with a higher APR to one with a lower APR, you will see a difference. For example, if you have a credit card with a 20% APR, you will pay $200 per year to maintain that $1,000 balance. On the other hand, you will pay only $80 on that same balance if you have a credit card with an 8% APR. That is a savings of $120! Imagine how much you will save on larger balances.
Even better, the best balance transfer credit cards offer 0.00% introductory APRs, which means you will pay no finance charges while that introductory period is active. With some balance transfer credit cards, this special rate remains in place until the entire amount you transferred is paid off.
What is an “Introductory Rate?”
An introductory rate is a special APR that lasts for a limited time. Often, the length of time this rate is in place is determined by your credit history. The introductory rate can be in place for as long as one year, though more common durations are six months, three months, and one month.
What is a “Fixed Rate?”
A fixed rate is a rate that does not change. Balance transfer credit cards with a low fixed rate may not offer a 0.00% introductory APR, but they might offer a 7.99% APR that remains this low no matter how long it takes you to pay off your balance, rather than skyrocketing up to 19.99% after the introductory period is over.
Why Does Everyone Say Balance Transfer Credit Cards are More Convenient?
Many people feel balance transfer credit cards are more convenient because it places all of your debt in one place. This makes it easier to track your expenses, to create a budget, and to get your bills paid on time.
Is it OK to Pay Only the Minimum Payment on My Balance Transfer Credit Card?
From a legal standpoint, all you are required to pay on your balance transfer credit card is the minimum payment. From a financial standpoint, however, this is a bad habit to get into. If you pay only the minimum payment, it can take you decades to pay off your debt – and that assumes you are not adding any more debt to your balance. So, if you want to get out of debt (and who doesn’t?), it is best to pay off more than your minimum payment. Set up a budget that allows for regular payments above your minimum payment to be sent to the credit card company – and stick to it.
Will a Balance Transfer Credit Card Get Me Out of Debt?
Yes and no. If used alone, a balance transfer credit card will not get you out of debt. If you transfer all of your credit card balances to your balance transfer credit card and pay only the minimum payment, it can still take you years to pay off the debt. Therefore, a balance transfer credit card should be viewed as one tool in you tool belt for helping you work your way out of debt. If used correctly and to its fullest advantage, it can help you get out – and stay out – of debt.
Related to : www.suntrustmortgage.com
Easy to Get Credit Cards
There are many different credit cards and many different banks offering them. There are easy to get credit cards and then those credit cards that can be so hard you don’t know why you would even apply. The thing about credit cards is that they can help or hinder your life. So when you are trying to obtain a credit card there are some things you should consider, especially regarding the easy to get credit cards. Some of the easy to get credit cards are for bad credit, no credit, or just easy to get because the card company feels they need more customers.
There are fees, interest rates, policies, terms and conditions, and other things you should think about. When you try for an easy to get credit card you are usually approved within twenty minutes. This is what makes them extremely easy to get. They will take the application you have just submitted and review your income to debt ratio. They will also access your credit history to determine the type of customer you will be. Once the risk is assessed they send an email or tell you on that same page that you have been approved and at what rate. This rate however may differ from the offer that enticed you in the first place. Since the card company doesn’t know everyone’s risk until they actually have an application they advertise to entice you to try for their card. This is not a bad thing. If you see a card offering 15% you are usually going to get near that APR. The rest of the advertisement will remain the same, such as 0% APR and Balance transfers for the first two months, or whatever the deal is.
You should note that most easy to get credit cards have lax risk standards and therefore the interest rate is going to be a little higher than some that are easy to get. For example they assess your risk based on whether you will be responsible or whether you will default. So if they think you are a higher risk you are going to have a higher interest rate, but they still give you the card. For those that are harder to get they will flatly refuse because of the risk you pose and not offer a better interest rate.
Many of us think the easy to get credit cards are the best, and in truth they really are. The easy to get credit cards offer a card to almost anyone. Their standards are better as well. For instance you have posed a bit of a risk in the past, but you have had a good clean record with the easy to get credit card for the last year. In this case you could ask the card to lower your interest rate, and they usually will. With harder to get cards you are likely at that interest rate or going to have an increased rate over time that they are unwilling to work with for you.
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