Bank of America BankAmericard Cash Rewards

Today I received an offer in the mail from Bank of America saying I am pre-approved for a new credit card! It is the new BankAmericard Cash Rewards credit card that they just launched. They offered me a $50 one time bonus after spending $500 in the first 3 months of opening. It was definitely not as good as Chase Freedom's 30,000 point bonus (equivalent to $300), but it did have some perks.

It had 3% cash back on gas stations, 2% cash back on grocery stores, and unlimited 1% cash back on all other purchases. The differences between Chase Freedom and this, is that the cash back percentage is locked in, and does not rotate category like Chase. However, like Chase Freedom, there is also a cap of $1,500 maximum of combined gas and grocery purchases per quarter for the 3% and 2% cash back, respectively.

Even though I just opened a Chase Freedom account the other week, I knew there is no chance for them to decline me because I was already pre-approved. So, I went online and filled out the application and got another instant approval!

Details

How to Calculate Interest with APR

With anything containing numbers, there is a usually a formula to solve it. Here are the steps to calculate the amount of interest you have to pay on your outstanding balance. 

Steps

1. Take your APR and divide it by 365 (numbers of days in a year) to get a daily periodic rate (DPR)
2. The DPR is then multiplied by the amount of days the outstanding balance have incurred 
3. That amount is then multiplied by the amount of outstanding balance you owe
4. The result is the amount of interest that is additional to your outstanding balance

Graphical Steps

Source: Bank of America

Example calculation
Purchase APR: 20% = 0.20
Outstanding balance: $10,000
Days incurred: 1 day

What is an APR

You probably see/hear the word "APR" all the time from credit card offers in the mail or car commercials on TV, but do you know what it means and how it works?

APR stands for annual percentage rate. These APR comes in different ranges depending on the kind of debt and your credit score. These rate are very variable and can fluctuate with the market.

Banks use an annual percentage rate to calculate a daily periodic rate that they will charge compound interest on your outstanding balance (that have no been paid of in full) on a daily basis.

You can usually find these APR towards the end of your banking statements.

Types of APR
Introductory (Promotional) APR
Usually 0%, which means there is no interest on your purchases for a limited amount of time (varies from 9-18 months).

Purchase APR
Usually after the promotional rate that varies from 12-24% depending on credit score.

Balance Transfers APR
Usually the same rate as the Purchase APR.

Cash Advance APR
Usually higher than Purchase and Balance Transfer APR (>24%). This occurs when you withdraw cash from an ATM with your credit card instead of debit card.

Penalty APR
Usually the highest APR due to late payments or violating the card terms and conditions (>24%).

Getting My First Credit Card

Success! My very first plastic currency!

Details
Bank: Bank of America
Type: BankAmericard Visa
Credit limit: $1000
APR: %0 for 12 months; 16.24% thereafter
Annual fee: $29/year
Benefits: none

How I did it
I first got my checking account during high school when I was 16 at Bank of America. They offered free checking and savings account for students. That means I did not have to pay the $12 monthly maintenance fee as long as I was still in school (up till age 23).