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What Are the Consequences of High APR Credit Cards?

Grace HelbigVerified
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Summary：High APR credit cards can lead to higher interest charges, increased debt, and lower credit scores. Learn how to avoid these consequences and choose the right credit card for you.

Introduction

Credit cards are a convenient way to make purchases and build credit. However, high annual percentage rates (APRs) can lead to serious financial consequences for cardholders. In this article, we will explore the consequences of high APR credit cards and provide tips for avoiding them.

Higher Interest Charges

The primary consequence of high APR credit cards is higherinterest charges. When cardholders carry a balance on their credit cards, they are charged interest on the remaining balance. High APR credit cards can result in interest charges that quickly add up and make it difficult for cardholders to pay off their balances.

Increased Debt

High APR credit cards can also lead to increased debt for cardholders. When cardholders are unable to pay off their balances in full each month, their debt continues to grow due to interest charges. This can result in a cycle of debt that is difficult to break.

Lower Credit Score

Another consequence of high APR credit cards is a lowercredit score. When cardholders carry a high balance on their credit cards, it can negatively impact theircredit utilization ratio. This ratio is the amount of credit being used compared to the amount of credit available. A high credit utilization ratio can result in a lower credit score.

Tips for Avoiding High APR Credit Cards

There are several tips that can help cardholders avoid high APR credit cards. First, it is important to research credit cards before applying for them. Cardholders should look for cards with low APRs and no annual fees.

Second, cardholders should avoid carrying a balance on their credit cards. Paying off the balance in full each month can help avoid interest charges and prevent debt from accumulating.

Finally, cardholders should monitor their credit score regularly. This can help identify any factors that may be negatively impacting their score, such as high credit utilization ratios.

Conclusion

High APR credit cards can have serious consequences for cardholders, including higher interest charges, increased debt, and lower credit scores. However, by following these tips and being proactive about managing their credit, cardholders can avoid these consequences and enjoy the benefits of credit card ownership.

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