Is There A Way To Avoid Paying Interest On Your Credit Card At All?

A lot of us are using regular credit cards and a large number of us probably own a credit cards for excellent credit as well. We all want to avoid paying interest on credit cards in any case. Loans are not free and credit cards prove that. In fact, the credit that we use is kind of a loan that we take from the bank / credit card company. But there is still a difference between a typical loan and the credit that you get on your credit card.

 

Whenever you seek a traditional loan from a bank / financial institution, there is a certain amount of interest that you have to pay. Credit cards that still offer a type of loan to you can be interest free. This is the biggest difference between conventional loan and a credit card. The interest that you pay on your credit card is basically the fee that you have to pay to the lender for borrowing their money.

Most Of The Time It Will Be A Percentage Of The Amount That You Have Borrowed

For example, if you have borrowed $1000 from a bank, at 20% annual interest rate, you will know them $200 in the form of fee / interest. This will bring your total to $1200. This is because you need to pay back the $1,000 that you borrowed including the interest fee. But this is just in the case of a contemporary loan. Credit card interest on the other hand functions a little differently.

Understanding Annual Percentage Rate Or APR

This is where the definition of interest differs in case of credit cards. The interest rate here is called the annual percentage rate. The APR is the effective rate of interest you have to pay for the money you borrow on your credit card for a year.

Therefore, credit cards are also a type of loan that you borrow from the credit card company and you pay it off when you pay your bill at the end of the month in full. But if you do that regularly, you can avoid paying interest completely with most of the reputable credit cards out there.

Following is a list of several different APRs that you should be aware of in order to prevent paying interest on your credit cards for excellent credit:

·         Purchase APR

This is the rate that credit card companies charge you on usual purchases. Most cards have a grace period which means if you pay your card bill on time and in full each month, there will be no interest charges.

·         Balance Transfer APR

This is the rate of interest that you pay when you transfer a balance from one credit card account to another. It may be different from the purchase APR.

·         Cash Advance APR

Using your credit card for excellent credit or a regular credit instrument to withdraw cash at an ATM is going to incur cash advance APR. Your interest charges will begin on the day you withdraw the cash. There is no grace period applicable here.

·         Introductory APR

Many leading credit cards offer 0% APR which is for the introductory period. It could be for purchases or balance transfers or maybe both. This low interest or 0% interest lasts for a limited period of time. So, these were instances when you can completely avoid paying interest on your credit cards.