Although APRs and interest rates are not the same for most credit instruments, they are the same for cards . Confused? Do not be! And it is that in the case of credit cards, different charges apply , such as annual fees, maintenance payments or charges for balance transfers; and all of them are detailed in a separate instrument.
If you review your credit card contract, you will notice that each of these operations has an amount or an interest rate of its own . However, when it comes to purchases, the APR is the same as the interest rate.
Why doesn’t the credit card APR include commissions, transfer fees, and the like? Because not all users who have a credit card think to incur these commissions .
Fixed interest rate and variable interest rate: differences
When you start the search for your next credit card, you may notice different interest rates , which are known in the financial and banking market as fixed interest rates or APRs and variable interest rates or APRs. But how are they different?
- Variable APR is an annual interest rate that can change in the future . Variable APRs increase or decrease based on an interest rate, such as the Prime Rate published in the Wall Street Journal. When the prevailing prime rate changes, it could affect variable interest rates on credit cards.
- The fixed APR is, on the contrary, an annual interest rate that stays the same over time . This means that the card’s rate is not subject to a specific index. So won’t it change in the future? Not necessarily. The issuing bank has the right to adjust the rate, but must contact you before doing so.