How is the APR determined?
Your annual percentage rate (APR) is determined by two main factors. The first factor is the overall economic climate, as measured by the prime rate. The prime rate is the average interest rate banks charge their best, most risk-free customers. The other factor determining your APR is your creditworthiness. Banks determine your creditworthiness through a variety of measures, such as your income, your employment status, your housing status, and your past credit history as recorded by the credit reporting agencies. Although the first factor, the prime rate, is outside your control, you can reduce your APR by building a good credit history and keeping your level of debt low. APRs may be fixed or variable. A fixed APR remains constant, regardless of movements in the prime rate. In times of low prime rates, a fixed APR card will often have higher rates than a variable rate card. This is because the bank expects the prime rate will rise at some point in the future, and they want to protect t
