Annual Percentage Rates. If you don’t know what they are or how they affect your life, then it’s time to open those eyes and figure it out!

Annual Percentage Rates or APRs as they’re also known indicate the amount of interest you will pay on any credit card balance you carry over to the next month, any cash withdrawals you take against your card or any balance transfers you make from another card. So, why should you care? For starters if you’re using that little plastic friend of yours for purchases big or small and are in turn only paying the minimum due on your card, chances are you’re paying a hefty price for the luxury of buying with Visa or MasterCard at your side. Those new Steve Maddens with the $100 price tag? Do they still look as good with a price of $170? With interest and fees, that’s what you could end up paying if you’re not organized. Also, did you know that it’s highly likely that your credit card company has several different APRs in place for your one card? It’s true. For example, your credit card can have a 15% APR for purchases, a 20% APR for cash withdrawals and a 10% APR for balance transfers. If you’re a gal that takes advantage of all three of these services, I definitely recommend grabbing a pen and paper, calling your credit card company and working some numbers.

As far as the basics go, the following are some key terms to keep in mind when researching new cards or getting the facts on your own:

Fixed Rate ­– This means your interest rate is set. The credit card company cannot increase your APR without notifying you first. Notice here that I said, notify you. They don’t need your permission to move forward with the increase.  So all that “junk” mail you get from your credit card company updating your User Agreement? Take some time to browse it before you shred it. There could be an APR increase hidden in the fine print. Still unclear what it all means? Call the 800 number on the back of your card. The customer service representatives should be able to explain the notice to you minus all the lawyer jargon.

Variable Rate – This means your APR can change from time to time. If you have or are offered a variable rate, make sure to read your credit card contract to find out under what circumstances the rate will fluctuate, what it’s tied to and more.  Still confused? Check your contract for the disclosure box which will display all pertinent information in a chart form or again, call your credit card reps. They’re there for you.

Secured Cards – Credit cards that require a security deposit. The larger the deposit, the higher the credit limit. These types of cards are usually offered to people with limited credit history, such as students or those who have had some financial trouble in the past. If you haven’t tried your hand with a credit card yet and are looking to bulk up your credit score, consider going this route as a beginner.

Regular Cards – Credit cards with no security deposit required and limited features.

Premium Cards – Credit cards that offer higher limits and extra services such as travel insurance, product warranties, reward points and more.

Now I’m not here to give you a Fab Girl’s Dictionary Guide to Credit Card Use, but I am going to give you a few tips and must do’s when it comes to managing your credit cards:

I have preached about motivating and making the phone calls that will save you big money in previous posts, and I’m about to do it again. It’s not like I’m asking you to skip your daily latte… heck… you can probably continue the coffee stops guilt free, if you’d just take twenty minutes to do the following:

• Grab a copy of your most recent statement.
• Find out what your APR is. If it’s not on your statement, make a “pre-negotiation” call to your credit card company to find out what your current rate is, if it’s fixed or variable and the last time it was increased or decreased.
• Collect any current “zero interest” or “low interest” junk mail offers you may have recently received.
• Make the call using the following script:

Hi,

I’m a good customer and recently I have received several offers in the mail from other credit card companies with lower APRs. I would like to lower my APR to coincide with these offers or else I’ll be forced to consider cancelling my card and switch companies.

(Keep in mind here that 14% is currently a normal average APR)

If the Credit Card Rep claims he/she can’t help you, ask to speak to a supervisor. Use your years as a customer or history of on time payments to your advantage and repeat the above script. If you don’t have the low interest offers I mentioned above, no worries. Just bluff a little – they’re not going to know. Also, they won’t close out your account by your just threatening to do so,  so you can relax about that as well.

Yes, the whole script does sound a bit corny, but trust me – it works.  I used it today, actually. You may not always end up with the results you’re looking for, but remember, it never hurts to ask. It’s not like you’re going to ever meet the Bob or Sue or John or Linda you were just speaking with, so there’s no need to feel embarrased about your situation or asking any kind of questions. Keep in mind however, that kindness  does have its rewards so remember to ask politely and curb the attitude if you don’t get what you want right away. A small rate cut is better than no rate cut at all. Also, if there’s absolutely no way they’ll lower your APR for purchases, consider asking for a promotional APR for balance transfers. This way you can get rid of the higher APR payments on another card and give yourself some peace of mind for the short term. (Note: Make sure to verify if there will be a onetime fee for processing any balance transfers).

Other Must Do’s:

• Make your payments by the Due Date
  • Late fees can run around $30 or higher and just one missed payment can trigger an increase in your APR. Also, late and missed payments can lower your credit score in some cases.
• If you do happen to make a late payment or perhaps miss one all together, immediately call your credit card company and ask if it will affect your credit. Also, if it’s only happened once, ask to have the late fee reversed. Be persistent and explain that it will not happen again.
• Try to only keep two – three cards on hand and less than a 30% balance on each of them. Keeping a low balance on the cards will have a positive effect on your credit score.
• Refrain from paying for your friends with credit and keeping the cash for yourself. Yes, we all want the reward points, but really – how many of us actually run to the bank to deposit the cash?
• Make sure to get a card without an annual fee. If you don’t know if you have one - call and ask.

Notice a recurring theme here? I know all of this information brings out the stifled yawns and glazed over eyes in all of us, but getting yourself organized, calling your credit card companies and asking questions is a must when traveling down the path to Financial Savviness. Even if you’re notoriously late on payments, or tend to run up high balances – now is the time to own up and take control. Make a budget, set up auto-payments – do whatever works for you to get organized. The potential for success combined with the savings involved should be motivating enough to get you on the right track!  So what are you waiting for? Grab your wallets, pull out those cards and start dialing some numbers!

P.S. I’d love to hear how this works out for any of you and am also available to answer any questions you have prior to or after making the phone calls. If you don’t feel comfortable leavng your questions/comments below, feel free to e-mail me at:  fabandfinanciallysav@gmail.com