ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A variable APR loan has an interest rate that may change at any time. The APR borrowers are charged also depends on their credit. The rates offered to those with excellent credit are significantly lower than those offered to those with bad credit.

Detailed explanation-2: -Variable APRs are tied to an underlying index, such as the federal prime rate, which is the lowest rate of interest at which banks will lend money. If the prime rate increases, your card’s APR would also increase, and vice versa if the prime rate goes down.

Detailed explanation-3: -Factors that increase your APR may include federal rate increases or a drop in your credit score. By identifying changes to your APR and understanding the actions that led to your increased rate, you can take steps that may help reduce your interest charges in the future.

Detailed explanation-4: -A variable-rate APR or variable APR changes with the index interest rate, such as the prime rate published in the Wall Street Journal. The cardholder agreement will say how a card’s APR can change over time.

Detailed explanation-5: -Purchase. The rate applied to credit card purchases. Cash advance. The rate for borrowing cash from your credit card. It generally is higher than for purchases. Penalty. Usually the highest APR. Introductory or promotional. Typically, a very low rate offered for a limited time.