Annual Percentage Rate (APR) tells you how much your credit card interest will be if you only pay the minimum balance each month.
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Further Explanation
Late fee: this option is incorrect because this is a fee charged to a credit card holder when the bank received his or her payment after the due date. When the card holder has a balance on his or her credit card, his or her due date will fall usually 21 days after the end of the person’s billing cycle.
Annual Membership fee: this option is incorrect because this is a fee charged to a credit card holder once a year by the bank or the institution that provides the credit card. The purpose of this fee is for the privilege and the benefits the card has to offer for its user.
Balance transfer fee: this option is incorrect because this is a fee charged to a credit card holder when the person transfer his or her balance on one card to another usually for the purpose of paying off his or her debt on the former.
Annual percentage rate: this is the correct option. Annual Percentage Rate or APR is the interest the card holder is charged over a 12-month period. The card holder is not required to pay this APR if he or she will always pay off his or her balances in full each month by the due date. On the contrary, credit card balance that was paid off by the due date will incur interest calculated on a monthly basis. Most card issuers use a daily periodic rate which is the annual percentage rate divided by 365.
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Keywords: credit card, interest, APR, fee
