Understanding Credit Card Interest Rates & APR

Credit cards provide you with a convenient way to shop, by allowing you to spend now, and pay later. There is a lot of discussion regarding credit card APR, and whether or not it matters to consumers. The short answer is, it depends. If you are a balance carrier, your credit card APR should matter to you. If you pay your balance off in full every month, your credit card APR is less of a concern. This article will provide you with helpful information pertaining to credit card interest and APR, and why it should matter to you if you are a balance carrier.

What Is Credit Card APR?

Before we discuss why credit card APR matters to balance carriers, it’s important to define what exactly APR is. APR stands for Annual Percentage Rate. In simple terms, APR is the annual cost of borrowing money. APR is essentially, a numeric representation of your interest rate. This infographic, will help you get a complete understanding of what APR is.

Why Does Credit Card APR Matter?

The best way to explain why credit card APR matters to balance carriers is to provide you with an example. There are many calculators you can use to see how much credit card interest is costing you, and how much you could save by paying down your balances.

Example 1: Let’s say you keep a balance of $5,000 on your high-rate retail or bank credit card, and your APR is 25%. Using those figures…man holding Launch FCU credit card

  • Your current monthly interest charge would $104.17.
  • Your interest over 1 year would be $1,250.04.
  • Your interest over 5 years would be $6,250.50.

Example 2: Let’s say you keep a balance of $10,000 on your high-rate retail or big bank credit card, and your APR is 23%. Using those figures…

  • Your current monthly interest charge would be $208.33.
  • Your interest over 1 year would be $2,499.96.
  • Your Interest over 5 years would be $12,499.80.

The above examples show why APR should matter to you if you are a balance carrier. The good news is, you have options!

Why Consider A Credit Union Credit Card?

According to Forbes, there are five reasons you should consider a credit union credit card.

  1. Interest Rate Caps
    Federal law prohibits federal credit unions from charging interest rates higher than 18%. Big banks do not have these same restrictions, and often times they charge interest rates of more than 30%!
  2. Lower Interest Rates
    According to Forbes, interest charges on credit union issued credit cards can be 20% lower than the same cards issued by big banks. This data was derived from a 2010 study released by the Pew Foundation, a nonprofit, public interest group.
  3. Lower Fees
    This same Pew Study found that credit unions have lower fees and penalties for their credit card customers than big banks do. For example, the Launch FCU credit card has no annual fee,* no application fee,*  no balance transfer fee,* and no cash advance fee.*
  4. Credit Unions Are Member-Owned
    Launch FCU is owned by our members. This means we do not have the same pressures of Wall Street banks to maximize revenue in order to please investors. Simply put, everything we do is for our members, and the profits we receive go back to credit union members in the forms of lower rates and higher dividends.
  5. Better Service
    Forrester Research conducted a survey, and found that 70% of credit union members thought that their credit union put their financial interests above their own. As a comparison, only 58% of regional bank customers felt the same way. At Launch FCU, our focus in on our members. This will not change, no matter how much we grow. It is our mission to provide our members with affordable loan products to help them achieve their life goals, and save more while doing so.
Card Type Balance Interest Rate (APR) Monthly Interest Charge Interest Over 1 Year Interest Over 5 Years
 How Much Could A Launch FCU Credit Card Save You?
High-Rate Card $5,000 25.00% $104.17 $1,250.04  $6,250.20
High-Rate Credit Card $5,000 23.00% $95.83 $1,149.96  $5,749.80
Launch Credit Card $5,000 17.00% $70.83 $849.96  $4,249.80
Launch Credit Card $5,000 11.00% $45.83 $549.96  $2,749.80

 

You can use Nerd Wallet’s calculator to help you understand your credit card’s APR, and how a Launch FCU credit card may be able to save you money in credit card interest. On top of the numerous benefits of the Launch FCU Credit Card, new credit card holders can enjoy a great introductory offer. Any new Launch FCU credit card holder will enjoy a 3.90% APR* on purchases and balance transfers during the first 60 days following issuance of their card. The 3.90% Introductory APR* on purchases and balance transfers made within the first 60 days will remain on those balances for a period of six billing cycles. Apply for your Launch FCU credit card online or call a friendly Launch FCU Loan Specialist at 321-456-5441 to get started.

*Introductory Rate and Balance Transfer Rate: *APR = Annual Percentage Rate. The 3.90% introductory APR for purchases and balance transfers will apply to transactions posted during the first 60 days following issuance of your card. The 3.90% introductory APR will be in effect for six billing cycles from the date of your first purchase or balance transfer. After the introductory period your APR will be 8.90% to 17.50%, based on your creditworthiness. Rates are subject to change without notice. Cash advances are excluded from the introductory APR. Foreign transaction fee of 1.00% of each multiple transaction in US Dollars and 1.00% of each single currency transaction. Credit cards require credit approval. See our terms and disclosures on the website for more details. Savings account required to open a credit card. Membership requirements include a $5 minimum opening deposit. You must live, work, worship, or attend school in Brevard or Volusia County to become a member. Federally insured by NCUA.. 

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