Could someone help me understand these credit card terms?

Question

Ok I recieved a letter in the mail by Capital One? First of all, are they any good? But I really wanted to know what does APR mean. I know what it stands for, but what does it do? And is 5.9% a good rate?

Yes this is my first card if u didn't notice. So I would love to take any additional information you could give me.. Like how could a build my credit without puttin myself in debt. (BTW I'm 19, if that is a concern)

Answer 1

5.9% is a very good rate, especially for a first card. Credit cards are not secured by collateral, so they're often charging double digit rates.

Capital One is the cause of a major lawsuit right now against the credit bureaus. They refuse to report your credit limit to the credit bureaus. When that happens, the bureaus only use the highest balance as your credit limit. For many people, this causes your account to look like it's maxed out when you might have thousands of extra credit available. And any balance over 50% of your available credit limit will hurt your credit scores.

If you take it out, you'd want to max it out once, let it get billed, then pay it off in full. At least that way, your account should read how it's supposed to in the future, and your credit should improve.

Be very careful about a few things: Cash advances are not at 5.9%. They're usually charged at 22% or higher. And when you pay down your balance, they will ALWAYS apply your payments to the balance with the lowest rates first. That makes sure you pay the highest rates possible on any money outstanding.

If you ever miss a payment, on this account or any other account you take out, they will charge a default rate as high as 29% or more. And they reserve the right to change your rates and terms at will, for any reason. Scary, isn't it? They can literally just bump your rate up for any reason, or no reason at all.

I personally hate Capital One's business practices. But they must be doing something good for some people, since they keep growing.

I'd recommend finding a local credit union and applying for a credit card from them. Not only will they treat you in a much fairer fashion overall, you'll get good service when you need it, and they will actually take time to counsel you about proper usage of credit.

It's very easy to get into bad habits of spending now, and thinking you'll pay for it later. Soon, you're scraping by just to make the minimum payments on your credit cards, 98% of which pay for interest.

At 18%, a $5000 credit card can take up to 30 years to pay off, if you only pay minimum payments. And cost you over $22,000 in interest in the process. Few people realize how quickly the interest eats you up.

Good luck, and keep reading and learning about proper credit usage. Take a look at sites like myfico or truecredit and read about how credit scoring works.

Answer 2

Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan, taking into account one-time fees and standardizing the way the rate is expressed. In other words the APR is the total cost of credit to the consumer expressed as an annual percentage of the amount of credit granted. APR is intended to make it easier to compare lenders and loan options.

5.9% is good for someone without any prior credit history, why are you getting such a good rate when i didnt, mine was like 10-15% usually

A good way to build up your credit without going into debt is just to make small purchases on the card and paying it off when the bill comes, usually when you do that they wont charge you interest which means you just pay what the product cost

Answer 3

Yanswer already said pretyy much what I was going to say. But if I'm going to add anything it's stay away from Capital One, they are the worst in the business.

Answer 4

Visit http://www.cheap-credit-cards.org for more info on credit card terms