**Understanding Balance Transfer APR vs Purchase APR: Which Credit Card Offers the Best Deal?**
When it comes to managing your debt, choosing the right credit card can be a crucial decision. Two popular options that often come into play are balance transfer APRs (Annual Percentage Rates) and purchase APRs (Annual Percentage Rates). In this article, we’ll delve into the details of each, exploring specific financial details, real examples, APR figures, and actionable advice to help you make an informed decision.
**Balance Transfer APR**
A balance transfer APR is offered by a credit card issuer when you transfer your existing balance from another credit card to this new one. The balance transfer APR is typically lower than the regular APR of the credit card, making it a more attractive option for debt consolidation.
Here’s how it works:
* You apply for a balance transfer credit card.
* If approved, you can transfer an existing balance from another credit card.
* You pay off the transferred amount within a specified time frame (e.g., 60 days).
* The new credit card issuer charges you a lower APR on the transferred balance.
**Purchase APR**
A purchase APR is the regular APR of a credit card used for everyday purchases, not just balance transfers. This rate can be higher than the balance transfer APR, especially if you carry high balances or make frequent purchases.
**Example:**
Let’s say you have a ,000 balance on your existing credit card with a 20% purchase APR and a 10% balance transfer APR. If you pay off the transferred amount within 60 days, you’ll save 30 cents per dollar (20%/1.3 = 12.5%). However, if you carry high balances or make frequent purchases, your purchase APR might be higher.
**APR Figures:**
* Balance Transfer APR:
+ Chase Freedom Unlimited: 0% for 21 months on balance transfers
+ Citi Simplicity Card: 1% of outstanding principal + intro 20% discount (2.99% – 25.49%)
* Purchase APR:
+ Capital One Quicksilver Cash Rewards: 15.49% – 24.49%
+ Discover it Balance Transfer: 12.74% – 22.74%
**Actionable Advice:**
1. **Choose a credit card with a low purchase APR**: If you tend to carry high balances or make frequent purchases, opt for a credit card with a lower purchase
Related: Authorized User Vs Joint Credit Card Holder: Key Differences
Related: Annual Fees Vs Rewards: How To Calculate If A Card Is Worth
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