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Comparing interset rates

 

The best way to compare interest rates on loans and credit cards is by comparing the APRs.

APR stands for Annual Percentage Rate.

The APR shows the amount of interest you will pay yearly (not monthly) and includes other costs and charges involved in the loan.

The APR figure combines all these costs and the interest rate and takes account of the length of your loan and shows you an approximate annual interest rate for that loan or credit card.

APR figures are the best way to compare interest rates but they are not perfect. Basically the lower the APR, the better it is!

Watch out for different APRs after an introductory offer has finished, or different APRs for different types of transactions.

You pay to borrow – you are paid to save!

When you think about borrowing money to buy something or buying something on credit, think about the following things:

Do I need this product? Is it worth the amount I need to pay for it after I have got credit?

Can I get it cheaper somewhere else?

Do I already have savings I can buy it with? It will cost more for you to borrow than if you will lose if you use all your savings.

Have I done a budget? Do I have money left over I could save or pay back a loan with?

How much do I really need to borrow?

What are the monthly payments – can I afford them?

How long will I have to pay for – can I cope with a 10 year loan?

Do I need insurance? Could I get it cheaper somewhere else? is it included in the monthly cost?

How much will I pay in total?

Will I be able to afford it if the interest rates go up?

Could I get it cheaper somewhere else?

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