Explain When This Credit Card Company Can Adjust the APR
The credit card company can adjust APR based on market rates, borrower's credit score changes, and alterations in the card contract terms to match market conditions and borrower risk.
by Sai V
Updated Oct 25, 2023
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Explain When This Credit Card Company Can Adjust the APR
The credit card company can adjust the APR based on market interest rate changes, shifts in the borrower's credit score, and alterations to the credit card contract terms. This adjustment ensures alignment with market conditions. For example, if interest rates rise or a borrower's credit score decreases, the company may increase the APR. Similarly, changes in the credit card contract can prompt adjustments. These measures allow the company to adapt to market fluctuations and borrower risk profiles effectively.
What is an APR?
APR, or Annual Percentage Rate, represents the interest rate charged for borrowing money, commonly associated with credit cards. It is expressed annually but can be divided by 12 to find the monthly interest rate. Understanding your credit card's APR is crucial, as it influences how much you owe, especially if you carry a balance. Paying off your balance within the card's grace period can help you avoid APR charges.
What Are the Different Types of APRs?
The different types of Annual Percentage Rates (APRs) associated with credit cards include:
- Purchase APR
- Balance Transfer APR
- Introductory APR
- Cash Advance APR
- Penalty APR
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