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Glossary / Key TermsWhat is APR? APR stands for the Annual Percentage Rate of charge. It can be used it to compare different credit and loan offers. APR on credit cards is calculated monthly - based on the amount currently on your card. The monthly interest is calculated as if your current card balance would remain the same over a year; the interest on the amount over a year (APR) is worked out and divided by 12 to give the monthly interest. All lenders must tell you what their APR is before you sign an agreement. It will vary from lender to lender. Usually, the lower the APR the better the deal for you, so always be prepared to shop around. Annual Charge It is less common these days but some cards still carry an annual charge. Most card providers will now make their money on the interest they charge on outstanding balances but some, particularly prestigious cards or those with many free services, will charge a small annual fee that is normally added to your card balance at some point during the year. Payment Protection This is normally an insurance policy that covers your payments in the event of illness, injury or unemployment. Beware - schemes offered by card providers can be expensive compared to independent insurance services. Additionally, the self-employed may be poorly covered by these schemes. Always check the smallprint before committing. |
Wed Mar 10 2010 News
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