Credit Card Offers: How to Determine What the APR Will Be
If you are comparing credit card offers, getting the terms and APR that will apply to you can be tricky. Here are some tips to get this information.
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When you are shopping for credit cards, in order to compare one card to another, you need to know about the various credit card terms and rates for each card. But getting the information you need from Internet sites and mailings is not always easy.
Why Is Getting Information About APR and Terms so Tricky?
Credit card companies charge different interest rates (called APRs) and have different terms based on the individual applicant's credit report or score. So, for example, a credit card offer on the Internet might say, “The standard APR will be 7.99% to 17.99% based on your creditworthiness when you open your account.” (Learn more about credit card APRs.)
But which rate will apply to you? You can always apply for several cards in order to discover the actual terms for your situation, but this is a hassle and the inquiries will appear in your credit report. Not always ideal.
How to Get Interest Rates and Credit Card Terms
Here are some suggestions to help you comparison shop for credit cards:
Remember: Recent Inquiries Won’t Kill Your Credit Score
Don’t let concern about credit inquiries prevent you from comparison shopping. Inquiries and new credit make up only 10% of your FICO credit score. According to FICO, for most consumers, a single inquiry will affect their FICOs score by less than 5 points out of a total range of scores from 300 to 850 points. Finding the lowest rates and fees for which you can qualify will help you maintain good credit, which will improve your credit standing in the long run.
Use the FICO Credit Score Estimator
If you don’t already have a recent credit score, use the FICO estimator at www.bankrate.com to get a rough idea of your credit score.
Use Internet Credit Card Comparison Surveys
Use online credit card comparison surveys to find credit cards with the terms you want. Consumer Action (www.consumer-action.org), a nonprofit organization, recommends several.
However, there are a few caveats to this approach:
- Some of these sites only include companies that pay a fee, and most are limited in the number of cards they survey. For example, a survey might not include cards from smaller credit unions or banks that may have lower rates.
- These sites generally do not include all the information you will need.
If you find a card that looks promising, go to that company’s website to see the full “terms and conditions.”
Here are a few recommendations for Internet sites with credit card surveys:
- www.creditcardconnection.org (for credit cards offered by credit unions, which usually have lower rates than bank credit cards)
- www.nerdwallet.com, and
Check Local Banks and Credit Unions
Check with local banks or credit unions, which may have better terms than offered on the Internet.
Check Out Consumer Reports
Review Consumer Reports’ recommendations for credit cards. (The November 2012 Consumer Reports magazine has a credit card review “The Best Card for You.”)
Speak Directly With the Credit Card Company
Talk to credit card company representatives to find out more about likely APRs and credit limits in your situation. Don’t just fill out applications on the Internet.
If you can’t find out which cards will give you the best terms without applying, then go ahead and apply. You may want to specify the credit limit and APR you are seeking in a cover letter. If you are approved, check the terms carefully. If the offer has a higher rate or lower credit limit than what you requested, you can refuse the offer, or you can request the information upon which the card issuer based its decision. (You can find a form to make this request in Nolo’s Credit Repair, by Margaret Reiter and Robin Leonard.) That information may help you decide if you should accept the rate offered, negotiate for better terms, or apply elsewhere for better terms.
For more information on credit cards and how to shop for them, visit our Banking & Credit Cards topic area.
Excerpted from Credit Repair, by Margaret Reiter and Robin Leonard (Nolo).