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Which of the Following Can Increase Your Credit Card’s APR?

Credit cards allow you to borrow money from a company, which can then be used for any purpose. In return, the company charges you a certain interest rate, which is displayed on your credit card statement with your balance and the current APR. An APR is the annual percentage rate that is charged by a credit card company. Credit cards can get expensive, however, so it's important to know how to lower your APR quickly and easily. Here are some tips to explore when trying to find a low-interest card:

1) Understand Your Credit Card’s Terms of Use

2) Try Switching Card Companies

3) Look For Offers in Your Email (Frequent Flier Miles & Rewards Points Are Common).



Credit Card Basics

A credit card is a form of borrowing money from a company. In return, the company charges you interest. The APR is the yearly percentage rate that is charged by a credit card company.

The APR is used to show how much it will cost for you to borrow money from the company. For example, if something costs $100 and your APR is 10 percent, then it will cost you $10 in interest for every dollar that you borrow.

This means that if your credit card balance goes over what you can afford to pay off in full each month, then the interest payments make up more than half of your total purchases.

Sometimes, companies offer low-interest cards because they want their customers to use them as long as possible. Other times, they offer low-interest rates because they are having financial difficulties and need customers to stick around longer so they can sell more products or services.


Understanding Credit Card Terms of Use

One of the first things you should do when researching a credit card is to understand its terms of use. Every company has different terms, but most will include information about late fees, penalties for overspending, and conversion periods for how long you have to wait before interest rates are increased. These terms can be intimidating at first, but it’s important that you take the time to understand them or else you risk incurring additional fees or penalties.


Switching Companies

If you're feeling frustrated by your APR, it may be time to switch card companies. Switching card companies is a good option if you have a large balance, don't want to pay interest on all of your purchases, or are trying to lower the number of cards you carry.

This can be as simple as visiting your bank’s website and selecting the “Apply Now” button to find new credit cards. Another way to switch card companies is with apps such as WalletHub that compare financial products across different providers. This allows you to quickly search for new cards with low APRs.


Looking For Offers in Your Email

Many credit card companies offer incentives to customers that make their cards more lucrative. Some of these incentives, such as offers for frequent flyer miles and rewards points, are common enough that you won't need to read the fine print of any particular card's terms of use.

If you're not sure which offers you can take advantage of, look in your email inbox. Credit card companies often advertise these types of benefits in their emails.


Frequent Flier Miles and Rewards Points

Many credit card companies offer a variety of perks for cardholders. Some of these include frequent flyer miles and rewards points. While this is not something you will be able to use immediately, it is worth signing up for a new credit card just to get these benefits.


What causes an APR to increase?

1. An increase in the interest rate

A credit card's APR is an annualized percentage, which means that every single transaction will incur a certain charge based on the interest rate charged by the card issuer. One of the reasons why you may see your APR increase is because there has been an increase in the interest rates charged by credit cards.

2. An increase in the time period for accruing debt

The length of time it takes to pay off your balance is another reason why you might see your APR increase. The longer you take to clear your balance, the more interest will be incurred, and therefore, the higher interest rate of your card.

3. Increased fees for late payments or over-the-limit transactions

If an individual does not make a payment or a transaction that exceeds their limit within a specific time frame, they will incur extra fees from their credit card issuer. These fees can be as high as $38 per month and are designed to prevent you from incurring too much debt on your account and getting into financial trouble later on down the line.

What do you need to know about these increases?

When the APR on your credit card increases, it's not a moment of joy. The increase can send some consumers reeling when they're already struggling to pay off their debts. However, there are actually several reasons why the APR has increased and what you can do if this happens to you. Here are some top reasons why these APR increases happen and what you should do when they arise:

Reason #1: You missed your last payment

This is probably the most common reason for an APR increase. If you never make your payments on time, then it's likely that your interest rates will increase as well. This is because creditors don't like to lend money to people who aren't paying them back in full, which makes sense.

Reason #2: Your credit score has decreased

If your credit score falls below a certain threshold (say, 800), then lenders may stop lending to you at all due to their risk profile. This could cause a sudden APR increase in order to offset the risk involved with lending money.

Reason #3: You've applied for new credit cards or loans

If you apply for additional credit cards or loans, then lenders will take into account that you have more debt if they see a large amount of new

Reduce the Interest Rate of Your Credit Card

A credit card's interest rate is determined by the APR, which is typically shown on your card statement. When you're getting close to your due date for paying off your balance, it's a good idea to take a look at your current APR and search for cards with lower rates.

A common way to reduce the interest rate of a credit card is by switching card companies. This can save you up to 0% percent in interest charges and could be worth doing if you're constantly having trouble meeting minimum spend requirements.

Another way to lower the interest rate of your credit card is by signing up for offers that are either sent directly to your email or through the mail. These offers typically offer rewards points as an incentive or will give you a low-interest rate without any annual fees.

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