Is 12.9% variable APR on a credit card “okay” if you have no credit history and this is your first card?

concretebrunette: Is 12.9% variable APR on a credit card “okay” if you have no credit history and this is your first card?
I know APR stands for Annual Percentage Rate, but I have no idea what that means.

Answers and Views:

Answer by Professional Peon
Considering some store cards are around 30% no matter what your credit is I think that 13% is quite resonable.

I would pur $ 100 on it and only pay the minimum balance which will be around $ 13 bucks. It will increase your credit score. Then check you score in 6 months to a year, and get a new card at probably 6 or 7%

But yeah that’s about where I started out too.

Answer by Brad P.
Actually that is pretty good anymore. Just don’t spent more than 30% of your credit limit and pay off your balance every month. If you pay of the balance every month it’s like you got a free short term loan from the credit card company.

Answer by Anna
it is the interest rate you pay on the amount that you don’t pay off your credit statement each month. Meaning if you listen to Prof Peon, and only pay off the required minimum balance due at your credit card statement, the remaining amount you owe will be charged the 12.9% interest rate. This rate is not bad at all, but if you pay off the full statement balance each month, you do not need to worry what the APR is.

Since you have no credit history and this is your first card, I highly recommend you start off practicing good, safe spending habits of only charging what you can afford to pay and pay off the ENTIRE statement balance at the end of each month before the due date. Do not carry a balance month to month and let the banks earn money by charging you interest as this is the quickest and surest way to get yourself into credit card debt.

When lendors pull your credit report, they will only see whether your account is in “good standing” or “delinquent” (aka you’ve missed payments), so paying interest on a balance will only hurt you and your savings in the long run and does nothing to help your credit score.

I’ve paid off my statements before the due date every month and now my 3 credit scores are all above 760 which pretty much guarantees me the best interest rates whenever I apply for any loans (car, mortgage, personal, etc.).

Answer by Michael T
APR is the percentage of interest that you will be paying on the amount remaining on the card on a annual basis. Although 12.9% APR is a pretty good rate in today’s market, it is still a very bad interest rate to be paying if you plan on having a future since you are mortgaging your future to pay for something that you want now.

For example, lets assume you had a credit card balance of $ 1,000 and you hadn’t paid down that balance or paid the interest. At 12.9% interest rate, your balance would be approximately $ 1,129 after one year and after 6 years, your balance would be approximately $ 2,070 due to the added interest. Therefore your debt would have more than doubled in 6 years due to the interest charged.

So if your salary doesn’t double over the next 6 years (extremely unlikely), the credit card debt will become an ever increasing part of your salary putting you deeper into debt.

The example above uses a small amount of money of only $ 1,000 but the amount could have been $ 10,000 that turned into more than $ 20,000 in 6 years.

If you don’t understand interest rates, you should only use your credit card and pay off the balances in full each month by the due date to eliminate any interest charges. Otherwise you may be on the road to financial ruin.

Answer by Antony
Do not close the card cause it lower you available credit line. You also can use this service to pre-estimate future scores for different scenarios of credit card payments – credit-report-free.totalh.com