Arter was also subject to interest from fellow Premier League side Watford, though he opted to join the 'Bluebirds' and Neil Warnock.
Howe spoke of the decision to let Arter leave, saying "It was very difficult. I think Harry's journey epitomises that of the team and the club where Harry came to the club from non-league and working his way up through the leagues, he has done it in such an impressive way.
"Tremendous desire, to achieve, to want to win, he has shown all those qualities that the team have and I can't speak highly enough of him.
"The difficulty is he desperately wanted to play - to give him that guarantee of playing opportunities was difficult for me.
"He didn't play great towards the back end of last season and we just felt we needed to keep him playing and enjoying his football - I think that's key for him. So we reluctantly agreed to let him go."