Final answer:
APR, or Annual Percentage Rate, is the yearly interest rate on credit card balances. A 9.99% APR is notably lower than the average range of 12-18%. Understanding APR is key in managing credit card debt and avoiding high interest and fees.
Step-by-step explanation:
The student's question relates to the Annual Percentage Rate (APR) found in a credit card disclosure. The APR is the rate at which interest is charged by the credit card company on any balances carried beyond the grace period. To illustrate, if you were to have a credit card with a 9.99% APR, this is significantly lower than the typical credit card interest rate, which often ranges from 12% to 18% per year. Given that banks and credit card issuers regularly offer rates between 17-20%, finding a card with a 9.99% APR could be considered favorable.
Moreover, the credit card market is substantial, with nearly 200 million Americans holding cards and a collective debt reaching into the hundreds of billions. With APRs averaging around 15%, Americans end up paying tens of billions of dollars in interest and fees annually. Finally, it's important to realize how the APR impacts the total amount repaid and the duration it takes to pay off credit card debt. A lower APR like 9.99% would result in lower interest charges compared to higher rates.