How Does Credit Card APR Work?

**How Does Credit Card APR Work?**



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How does a credit card apr work, and how is compounded? And does that mean? Btw the highest apr in history was 79.9 percent it was by the premier bank back in the days for people with bad credit. OMG

Now in this video I’m going to break down how a credit card can either cost you 0% a year or anywhere between 10-35apr annual. I’ll also explain Apr’s on secured credit cards and normal credit cards and what the difference is. So if you want to find how exactly how apr works and if you should also carry a balance stick around to end of this video.

What does APR stand for:
Apr stands for Annual Percentage rate, basically how much you’ll be charged in interest or how much you’ll a year.

Tommy What about APY:
Well APY or Annual Percentage Yield is the exact same thing as APR except it takes into account compound interest. And it’s usually higher than APR unless the loan is compounded Annual. Comment if you want a full video on compound interest.

Story: If I opened a credit card, and let’s use a real example here. If I opened a discover it card.
And I get 25.24% APR what does that mean.

How does Credit Card APR Work?

Call discover Customer service and ask how it works in full.
1. How does APR work?
its your annual interest rate and its calculated daily.
2. How is it compounded
Daily on your average balance.
3. What is APY
This takes into account compound interest.
4. What is my month APR
Grab your Annual and divide it by 12(month in a year) Example 30/12 so your monthly is 2.5%
5. How do I calculate it
12(month in a year) Example 30/12 so your monthly is 2.5%
6. Can I ever get an APR reduction if I increase my credit score
Yeah, jsut call in and ask for a reduction and base it on competing credit cards
7. What is the Prime rate
The federal rate at which they borrow money from the government
8. How do you guys choose the apr
We just have a profit margin
9. What does variable mean APR mean, does it constantly change
Changes according to the prime rate which the fedaral reserve can change
10. How can I avoid paying any interest
Pay before your closing date
11. What is a closing date
This is when your cycle end and they give you your interest for that month.

EXTRAS
Why do credit cards do 0% apr { so you rack up a balance and pay it off for 5 years)
What about loan consolidations, well subscribe and comment and ill make a full video on that?
Does the Apr matter? No just don’t carry a balance

Thoughts:
Now that you understand apr, here are my final thoughts. NEVER EVER carry a balance.
Why? If interest in 25% and the average return on Market is 7-12, you literally have to double your return to get even.
Play smart

Bonus:
I have a playlist with almost everything you need to know on credit cards so ill link that in the comments and if you want any videos or have any questions just comment down below.

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so how does a PR and APY actually work and how is it possible I was able to get away with carrying a balance for the past like 10 months and paying $0 on my credit card on top but if you're wondering Tommy why are you covering up the Scarborough nobody's gonna steal your stuff long imagine the by Starbucks and blame it on me like all my credibility here on YouTube is like completely like done ok I'm done on top of the guys whose are interested in fact did you know the highest APR ever recorded in history is run seventy nine point nine nine percent so imagine getting a credit card and paying around eighty percent in interest towards that credit card every single year absolutely absolutely insane and those my premier bank it took it off now but they still have one of the highest rates on the market still up today stay on top of the get to this video I'm gonna make sure to break down for you how APR works and what's the difference between a PR and APY on top of that I'm also going to tell you why unsecured cards also have a higher rates usually than normal credit cards so if you want to find out all this information make sure you stick around to in this video now that you guys don't know me my name bracing on accountant and I posted on YouTube every single day do you hear me yes I said daily content I post videos every single day summation scribe with a vision bus we get notified every time I post a new video which again is every single day and hit the like button for excited to us we find out how I got away with paying no interest for the past like 10 months all while carrying a balance so make sure to stick around for that and comment down below let me know what's the APR on your credit card currently do you know it do you not know it if you do know it comment down below and if you don't know it well make sure you know this information so go search it up and go call some people okay you need to know this information 100% now let's clarify a few things just so we're all on the same page so tell me what is APR and how does it work you know because I have this credit card and this credit card is around a 25% APR well what does this mean Tommy what does APR actually me what it means annual percentage rate now what this means is for example if I were to carry a balance of $100 on this card they would try to run $25 a year because the APR is around 25% so the APR is the interest that will charge you for whatever balance you have under card for that tire year and another thing I want to clarify assist no one talks about this but compound interests okay now if you don't know this credit cards are usually compounded every single day meaning that for example away compound interest is basically interest on interest if you owe $1 in this card and it turns you hypothetically 10% every single day on this card well the first day it would be like a dollar and 10 cents you owe the second day is supposed to be one dollar and twenty cents but now it's one dollar and 21 cents why because it basically took the dollar plus the ten cents and never charge you interest on that dollar and ten cents not just on the dollar that you're originally owed that's how compound interest works which is good when you're investing but bad when you owe money for example so if you owe a lot of money over time this compound interest gonna be accumulating and accumulating every single day so there's that okay Tommy I think I got it okay a PR and your percentage rate compound interest interest on interest but what is a py and what's the difference okay I don't understand this well a py is usually higher than ap art now what does this mean Tommy basically APR doesn't take into account compound interest so imagine right remember when I told you well it's one dollar then one dollar and ten cents and one dollar and 21 cents because it keeps compounding on each other right you understand that well a py takes that entire thing into account and calculates the interest for one year calculating the compound interest on top of that that's the only difference the only difference is APR is the regular rates a py takes into account compound interest on top of that comment down below let me know if so far you understand what APR is and what a py is also and what the difference is between them comment down below let me know if you don't understand comment down below I'm gonna be in the comments all day today so I'm gonna be answering all the questions so if you have any questions comment down below and you might be wondering Tommy okay I think I get it but I still have more and more questions and here's thing guys I met you to call customer service right now for my credit cards discover and as you find out exactly all the details on APR house calculated what it is monthly what it is weekly why they do it why they don't do it how they come up with the entire interest I'm gonna ask them all those questions so make sure you stick around for this because you're gonna hear all the information straight from the horse's mouth let's call them right now and find out now this cover is 24/7 seven days a week and they usually answer very quickly so let's find out how long you take to get on the phone yeah hey Tommy Bryson I'm doing good I'm just calling in today just to find out some information about a PR and how it works because me and my wife we were actually sitting down today he's trying to figure out all our finances basically the first question is eighteen point two four percent okay and here's my question for example when that time comes and say for example I want to carry a balance like when it says for example like hey like this is the minimum payment that minimum payment is it just interest or does it have capital alongside it so my question is what percentage is usually this be capital because I know like the percentage for the APR is gonna be like whatever monthly APR it is but like for capital what percentage do you guys actually take to actually like calculate that calculated at two percent of your balance okay that's gonna be your basic calculation unless your interest happens to be more than that 2% method then we'll add $20 to that so that something is going towards your balance okay oh okay so stop I said that didn't make any sense at all so you're saying that out for example if the interest for example for like $10,000 and the APR stay for exempt the interest will be like like on or just like like $200 and that is like dollars so then would be like okay so it's $35 and whatever is greater and if anything's a if you're interested greater than $35 you had another 20 bucks so just in case we can actually think this like go towards your capital awesome okay got it and how does compound interest actually work because someone told me today at the office that you guys actually are like compound the interest every single day or something like that and for example what does that mean exactly because someone like like put an example in my head and then I basically tell me if you owe like $1 and they tell you like 10 percent every single day that's $1 $10 $10 turn but if it's like being compounded then it means that if you owe like $1 10 then the next day that you know like $1 21 cents because it's being compounded on top of the dollar 10 already owes our work but I'm keeping in mind now that 18.2 4% variable that you're seeing yes your yearly rate we designed that by 365 to get your daily rate yesterday change use for variable duck is not what you're being charged daily by your average daily balance so look at a copy of your statement when you look at it underwear your transactions are you'll be able to see we give you a breakdown on what your average daily balances hurt that we would charge you interest on for the month and you would be able to see that and that is what you would actually see that we charge you so you may like your imbalance maybe $10,000 but if you didn't carry that $10,000 for the full month like so you didn't make a large transaction tilt toward the end of the billing period and you you only have like a five thousand dollar balance for the majority of your billing periods you may only have an average daily balance at your accrued interest or for like maybe six thousand dollars so sounds compelling yeah compound interest it's basically your APR divided by 365 gets gets you like that number every single like daily but on top of that if you if you're carrying a balance of like maybe like a hundred dollars you'll be charged out but you won't be charged more interest until like you have a greater balance basically right how do i how would I calculate like on the the monthly Apr just like divided by like twelve or something how you could do it if you wanted to do it but I'm keeping in mind so yeah it would give you a rough estimate if you wanted to do it on it you know yeah in question for example right now my interest rate is on what is that eighteen percent you said what's the lowest you guys offering like what's the lowest you guys like uses offer because I think was like 13 to 25 percent was it basically if I if I have a good standing with you guys to get a cent on my account and for example when I first initiated everything I was at 18% is there any way that I can all back in and they're like we're gonna go see like the interest like or something and for example what's it what's the prime rate because I didn't notice that on the under on the thing it says like the primaries like two something percent in the US chart exact another sixty percent on top of that I'm just curious like what's the primary point five percent and that's but what does that mean basically was the primary pass to me okay so that's the rate you guys pay for the money and then you guys flip the money for like another like I'm sixty percent or so okay and for example what is I'm a variable APR mean does that mean is okay so does that mean that your rate stays the same the only thing has variable is actually like the the primary okay got it and how can I avoid like I'm paying the interest because I'm still confused about like the closing dates to know that fancy stuff just a min balance in full each month so for example if I were to spend $100 now and I paid off before my payment is due I'm good to go before the closing date is there a difference we like the closing dates and then like where my payment is actually do okay so the most important thing is basically just like pay attention to a closing date rather than like your due date right so you I mean your minimum payment do I mean as long as you have that you you wouldn't have here statement balance in full each month to avoid interest so like your so if you were recurring interest you want to have that paid in full each month before your statement closes yeah I think I'm gonna I think I got everything I'm gonna take this information to my wife and then hopefully like now we both have like a better understanding of everything thank you so much so there you go you heard it straight from the horse's mouth and hopefully you enjoy that conversation again I only waited around like one minute for like discover like customer service again they're always like so good at customer service I've never asked you surprised because they do a very good job at it but I know you might still have some questions so I still kind of want to break everything down Tommy you know something well your credit card doesn't charge you any interest because you have a promotion why do they do that huh what do they deserve you know money on the first like 1215 months well the answer is this because they actually think that the average person is gonna fall for this trick so the trick is this if you have a credit line of maybe like $10,000 $1,000 doesn't really matter right you have one dollar credit line but the nuts with you in your interest well you probably just said I hey okay I got an idea I was gonna use it stack up my balance then I'll pay it off when I can well what happens if you overuse it now the promotion is done and now you have to carry a balance for a very very long time because on average if you overuse it you probably can't afford to pay it off instantly so then that's how they get people to get you in know APR you spend a lot of money now we got you for like ten to five years or like five to ten years whether you want to call it and that's how to trap people in the credit card debt cycle Tommy well how does loan consolidation work well if you want to find out how that works subscribe hit the like button comment down below let me know that's a full different video so I'll make it as long as you request it now the last question is this well Tommy does the APR even matter the answer is no not really for example remember when I told you like hey these are charging around like 80% in Apr every single year well it doesn't matter because you're paying off your balance every single month you're just buying things you need well doesn't matter it doesn't matter how much you try to charge because I'll never let you charge me in the first place but just in case anything does happen the APR does matter and usually the APR is based on your credit score so again so again if you have a high APR doesn't matter just be off your balance every single month now if you plan on carrying a balance for a long time don't know why you would do that make sure your APR is pretty low so comment down below let me know do you understand APR 8 py how everything works to answer all your questions that I not answer your questions if I didn't comment down below those questions I'm gonna answer all of them and if you want any more videos just comment them down below I need ideas I upload every single day so I'm gonna make those videos no matter what now before I leave you I want to say this last thing well Tommy what do you have to say already watch this whole video well here's my thing bro basically a lot of people out there saying hey Tommy 24% is nothing just 2% every single month well here's my thing it's very important you don't care you're balanced and here's why it's gonna be scary well you know that the average ETF right if you don't know what ETF is I have a video on that also but here's my thing your average investment I make it between 7 to 12% every single year and the APR on the credit cards around 24% so unless you're Warren Buffett you're now gonna be able to actually have an investment that pays you more and this credit cards gonna charge you on a yearly basis so it's very important because 24% every single year for the next 60 years is a lot of percentages okay Alexa what's 60 times 24 so that's one thousand one hundred and forty percent and by the way that's not an accurate estimate but I'm just like putting that out there just let you know that hey it's a lot a lot of lots and if you have to pay money on your money every time you use it I just recommend you don't carry a balance buy what you need don't buy anything you can't afford and here's my rule of thumb don't buy anything you can't buy three times if you combine three times you can pay it off whenever you like okay that's what my rule is so I don't buy anything I can't buy three times as always guys here watching the video if you like the video go ahead and like the video helps with the channel a ton and top let me describe the channel hit the duplication buzz you're notified every time I post a new video which is literally every single day yes I talk very fast and I like it on top of that guys you want to talk to me one-on-one una uno just DM me on instagram @ Tommy Bryson again I answer all my DM so whatever you dear me I'm gonna answer I'm gonna help you so don't worry about that and table if you wanna join all of us here from the channel on discord go ahead and try to join us we have a link down below it might be too late we only have 100 spots open what's our new sponsor Fields we're not opening it until 2020 so get away you still can I'll see you guys next time and that's video thanks for watching and peace

13 thoughts on “**How Does Credit Card APR Work?**

  1. John Lee

    My credit card hates me cause my apr is 14.99% and dont care. Cause i always pay my in full when my statement is due with auto pay. They could rising my apr 80% is still 0. I follow my 3 rules and try not to break it.

    Reply
  2. ArchLinuxTux

    If you're condoladating loans think long term, may prevent or allow you lower intrest or other inventive programs down the road, student loans will most often be your oldest account.

    Reply
  3. Oscar R

    Been debt free and no credit cards for a few years however I wanted to build my credit again got a Amazon/Chase card @ 24.7% always paid on time now I just got approved for a Citi Card @18.5 %. so getting better. The important thing is to pay in full every month stay out of debt so don’t really care about the APR overall.

    Reply
  4. Fatal Jay

    I dont know my apr lol, I just always pay on it monthly, I only use the card for getting my credit up for a business loan that im going to apply for this month, beem having my card for a year and two months…..question, is a bank loan the best option for starting your own business….im going to start an atm business

    Reply
  5. Garen1

    That moment when you realize that you can call the bank and ask them questions like that. Why did this never cross my mind till now

    Reply
  6. Richard Marketer

    I love this guys video. He stands by his word. He is actually in the comments. Plus, he’s like the only one who is different. He calls the company up, and just is all around a great Youtuber!

    Reply

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