How to Calculate APR Payments for a Credit Card
All credit card companies are required by the law to disclose the annual percentage rate (APR) they charge on the credit line they extend to the consumers. If you read the terms and conditions you receive with your credit card, it clearly mentions APR for all categories of the loan provided to you on the card. You can then be able to a keep track record of how much your bank or credit card company charges you for the money you are lent.
You can calculate the APR overall over the period of 12 months to take out the monthly percentage of the rate that is applied on your credit. It can be easily done by dividing the overall rate over the period of 12 months. However, as a consumer you need to be aware about the difference in the rate of APR. For example, it is likely that you are charged a higher rate on funds transfer, and lower at goods purchase. Usually funds transfer rate is the costly use of credit card and if your are not aware of the actual APR you are paying on your credit, it costs you too much and you can land yourself into financial difficulties.
Be Aware of APR Terms and Conditions
At the time you sign agreement with your credit card lender, you should read all terms and conditions carefully. You should know that by signing the agreement you accept all those conditions, including APR, and if you later on find that the APR charge on the credit line is too high, you cannot do much about it unless you cancel the credit card.
Know Variation in APR
You should know beforehand how much your credit card company charges for different category of services provided on your card. For example, you are likely to be charged higher on money transfer than on goods purchase. If you read agreement carefully you can be aware of all these differences.
Knowing Monthly Average
If you want to know your monthly APR on your credit card, you can simply divide the total APR into 12 months period. For example, if your APR is 12 per cent, you can divide 12 by 12 and the monthly average is 1 per cent.
Taking Out Monthly Finance Charge
You can also take monthly finance charge on your credit card for a particular month's billing cycle. You can know this by multiplying average daily balance by monthly periodic rate, and this will let you know monthly finance charge for that billing cycle.