Credit cards are undoubtedly one of the few financial instruments that have assisted in managing finances. Facilitating the possibility of deferred payments, credit cards allow incurring expenditure even when one runs out of cash by the end of the month. Every expenditure entailed through the credit card gets owed to the credit card company. This amount is required to be repaid later, before the due date.
It is here where the complications usually begin and the convenient financial instrument can start appearing complex. Any default in repayment can prove to be a costly affair as the banks charge interest on the outstanding balance. This interest, when calculated on an annual basis, gets referred to as the APR or the Annual Percentage Rate.
Besides the numerous rewards and benefits, it becomes imperative to take into account the APR before applying for a credit card. High APR does not augur well, particularly for those who are irregular in clearing the debt. When one is already struggling to clear the dues, high interest only intensifies the problem. Hence, it becomes necessary to find a good credit card APR.
First and foremost, let’s answer the question — do all credit cards have APR?. The answer is yes. All credit cards are accompanied by an interest rate, expressed either monthly or yearly. If the APR is 24%, then the monthly interest comes down to 2% per month. However, there’s a catch. There are essentially four kinds of APR.
- Purchase APR: Whenever we mention APR, we usually mean Purchase APR. This one is incurred on any purchase made after one fails to clear the dues. Calculated daily, Purchase APR lasts as long as the amount is not repaid to the issuer.
- Cash advance APR: This is the APR incurred on cash withdrawals. Some credit cards incur no interest on cash withdrawals for a limited period. For instance, the Bajaj Finserv RBL Bank SuperCard enables cash advance sans any interest for a period of 50 days.
- Penalty APR: Penalty APR is incurred when the cardholder fails to clear the dues for two consecutive months.
- Balance Transfer APR: Balance transfer is the feature that allows the transfer of credit card dues from one card to another. This transfer is enabled only after incurring a Balance Transfer APR. However, the credit cards which do not have APR are usually taking into account the balance transfer card. Axis Bank, Kotak Mahindra Bank etc. are some of the institutions that do not charge APR on balance transfer for a limited period.
So, do all credit cards have APR? Yes, they do except in cases of Cash Advance APR and Balance Transfer APR for certain banks. So, now when all credit cards are accompanied by a yearly interest rate, it becomes vital to find ones with the lowest interest rates. Annual Percentage Rate up to 35% can be considered as a good credit card APR, in 2021. Let us look at some of the best credit cards with low APR available-
- SBI SimplySAVE Credit Card: This credit card variant by SBI comes at just 30% APR (2.5% per month) on secured cards. However, the yearly rate rises to 42% on unsecured cards. So, avail of a low-interest card just by depositing an amount as security.
- ICICI Bank Instant Platinum Credit Card: This credit card by ICICI Bank incurs a mere 29.88% APR on the outstanding balance (2.49% per month). Moreover, there’s no joining and renewal fee. Save handsomely with this credit card and also savor benefits like reward points, cash backs, etc.
- First Citizen Citi Credit Card: One for the shopaholics, the First Citizen Citi Credit Card draws only 2.5% interest per month (30% APR approximately). Relish accelerated reward points and waiver on fuel surcharge with this credit card.
Credit cards with low interest rates can be a life-saver, if one misses the due date for it induces less fine. However, APR should not be confused with the annual fee which is basically the renewal fee.
Bajaj Finserv RBL Bank SuperCard is a user’s delight as it extends several facilities; it allows instant loan approvals, interest-free cash withdrawals for up to 50 days, and conversion of high-end bills into EMIs, besides the usual credit card benefits.