The annual percentage rate (APR) is the expenses that are charged to an account during the year in which they arise. For example, the expenses that may be incurred by an organization that owns a parent company in which it has a 51 percent ownership interest may be treated as expenses incurred during the year of their accrual. If the parent company incurs certain expenses, as a result of its ownership of the parent company, before the balance on its balance sheet, the cost will appear on its profit and loss account. This is commonly known as the cost of capital.
The annual percentage rate (APR) disclosed and the cost of borrowing varies widely from lender to lender. What you pay for your home loan and what others pay varies widely from one lender to the next. It’s important to note that there are no hard and fast rules or regulations that govern how much lenders charge or how they report the APR on a loan. But, in general, lenders use the same basic formula to calculate their loans’ APRs that is widely accepted.
The annual percentage rate is the interest rate you pay for your credit card loans, savings accounts, or any other loan or investment product. This is the rate of interest that will apply to the principal amount of the loan or investment. For example, if the total loan amount is $100 and your APR is 3.75%, then this means that for every $100 you make a loan, you pay 3.75% interest.
How to avoid credit card interest
Simplify your credit game. Pay your balance monthly or the amount shown on your account statement and avoid credit card interest.
Check your credit card statement
Understanding credit card statements and interest charges can be overwhelming and confusing. Be sure to check the interest rate, the balance on the statement, and the current balance.
How to avoid paying interest
Options to avoid paying interest include:
- Settle each month the balance of the account statement (the amount from the last cycle of your account statement).
- Paying off the current balance (the amount corresponding to all the most recent transactions) will also help you avoid paying interest.
How to reduce interest
Sometimes we can’t afford to pay enough of the balance to avoid interest. At those times, these strategies will help you maintain a lower interest rate:
- Make at least the minimum required payment or an amount that allows you to reduce the balance and reduce the amount of interest charged.
- Pay on or before the due date on your statement.
- Explore credit cards with lower interest rates and fees.
- Explore options that offer balance transfers to help lower your interest rate.
Use your credit card wisely
Being careful with the use of your credit card can be achieved in several ways. Here are some examples:
- Stick to your budget. Only spend what you can afford.
- Improve your credit score by obtaining and properly using your credit cards.
- Minimize the use of your credit card and use the debit option when possible.
- Track your spending and spend only what you know you can afford each month.
- Review your credit card spending each month and track any errors you find on your statement.
- If possible, settle the balance.
- Set up automatic payment on your card, using your bank to ensure credit card bills are paid on time.
Make smart credit decisions
Poorly managed credit cards result in wasted money and can turn into bigger problems, even damaging your credit score. Stay informed about your credit report, credit score, and the credit bureaus. Monitor your credit report regularly to identify and take steps to rectify any issues that require it.
