What Is APR? How Do Interest Rates Work?

APR is an acronym for Annual Percentage Rate. It primarily matters if you plan on not paying off your credit card bill
every month. APR is the interest you will be charged on any amount you did not pay in full from your last statement
balance. If you’re debating between credit cards and plan to carry a balance, comparing APRs is a good way to see which
card might be better for you.

Pro tip: You can negotiate your APR, especially with credit cards you’ve had for a long time and that you’ve paid on
time.

Bottom line: Don’t carry balances on credit cards unless you absolutely have to. Then you get to use your credit cards for
free and APR is irrelevant!

Glossary:
· Card Class: Classic, Platinum
· Annual fee: Yearly fee to use the card
· V= Variable Rate: The rate will change throughout the year
· F= Fixed Rate: Interest rate will remain the same
· APR: rate of interest that includes fees and costs paid to acquire the loan.
· Late fee: Fee charged if payment is not received on time
· Over the limit fee: Fee charged if you spend more than your credit limit allows
· Grace period : The standard grace period is usually between 20-30 days. If there is no
grace period, finance charges will accrue the moment a purchase is made with the credit
card.
· APR for cash advance: rate of interest including fees when you use credit cards to
withdraw cash
· Fee for cash advance: A charge by the bank for using credit cards to obtain cash. It can be
a flat (set) fee or a percentage of the amount of the cash advance.

Comparing Credit Card Rates

Directions: Go to www.bankrate.com. Under the CREDIT CARDS tab at the top, click on Best Credit
Cards of 2018 under “Best Offers.” ALL ANSWERS SHOULD BE IN A DIFFERENT COLOR TEXT. When
you finish, upload this document to your webpage.

1. Complete the chart below to comparing three credit cards, of your choice, and their rates.
Type Card #1 Card #2 Card #3

Name of Card Chase Freedom Wells Fargo Cash Wise HSBC Cash Rewards
Unlimited Visa Card Mastercard

Rate (APR) 0% 15months – 16.49- 0% 12months – 14.49- 0% 15months – 14.49-

25.24% 26.49% 24.49%
 Other benefits Unlimited 1.5% cash Unlimited 1.8% cash Unlimited 1.5% cash
offered back on every purchase reward on every purchase back on every purchase

$200 cash reward bonus $150 cash reward bonus

after spending $1,000 in after spending $500 in the
the first 3 months first 3 months

10% anniversary bonus

once a year

No foreign fees

2. Why would you choose one type of card over another?

It really would depend on which would be best for my lifestyle, and how much I plan on actually spending on
the credit card. It also comes into play with what the rates are and how much my credit limit for that card is.
The extra perks also are bonus I would look into.
3. Would you qualify for all three types of cards (look at some of the qualifications for different cards on the
bankrate website before answering this question)? Why?

Yes, they each don’t really have set requirement but everyone would have different cases of rates and such.

4. Use the Credit Card Payoff Calculator under the Credit Cards tab at the top and compute the cost of
charging $2000 on your credit card to pay for the new couch and television set you need in your apartment.
Calculate the cost of paying only the minimum and cost of paying a higher amount. You may not pay off
your full balance or pay more than $150 per month.

Charge $2000 Minimum payment Other payment ______________

$25 $100

Rate (APR) 13%

# of months to repay 177 23

Total cost of credit 4,425 2,300

(above original charge)

5. What is the best payment plan when using a credit card?

The best payment plan would be paying more a month than paying less because in the end you really pay
more due to the rate.
6. Take the link to Best Student Cards under the Credit Cards tab at the top. Pick two and compare them by
filling out the chart below

Card 1: Card 2:

Company/Bank Discover it for students Citi thankyou college student

Card Class n/a n/a

Annual Fee 0 0

Variable or Fixed Rate variable variable

APR 14.49%-23.49% 15.99% - 25.99%

Late Fee $37 Up to 29.99%

Grace Period one month free n/a

Over the limit Fee n/a n/a

Cash Advance APR 26.40% 26.74%

Cash Advance Fee $10 or 5% $10 or 5%

7. Which card is the best for you and why?

The citi thank you card, it comes with more perks. Especially for college students who go out a lot and spend money on
food and such. Both are similar with apr and such but when it comes down to which one to get goes to which has better
benefits.