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Financial Wellness
Why Credit Card APRs Matter
When dealing with credit cards, the APR (Annual Percentage Rate) is one of the most important factors to consider — especially if you carry a balance each month. This is because an APR determines how much it will cost you to borrow money.
If you consistently pay your credit card balance off each month, it does not matter whether your credit card carries an interest rate of 10 percent or 25 percent. You aren’t carrying a balance, so your issuer cannot charge you interest.
However, should you find yourself in a situation where your spending exceeds your earnings for a given month, and you carry forward a balance, the APR takes effect, leading to interest charges on your entire outstanding balance.
What are the different types of APR?
Purchase APR
This is the interest rate applied to all purchases made with your card online, in person or over the phone.
Introductory APR
This is a promotional interest rate for a limited period of time that is lower than the card’s regular APR, sometimes in the form of a 0 percent intro APR. It can apply to purchases, balance transfers or both. Once the introductory period expires, the regular APR will apply to your balance.
Cash Advance APR
The rate for borrowing cash from your credit card is typically much higher than your purchase APR and does not come with a grace period. It is also often applied to convenience checks.
Penalty APR
This applies to missed or returned payments and could go as high as 29.99 percent. You might have to make several consecutive on-time payments before your credit card issuer removes the penalty APR. Payments more than 60 days past due could result in the penalty APR applying to your current balance, as well.
Promotional/Reduced APR
A lower rate for a period of time. Once the promotional rate is over, the APR reverts to current rate determined by lender. If there is a balance on the account, the balance is charged the current APR.
How to find your credit card’s APR
There are a number of ways to find out your card’s purchase APR. For one, it should be in the disclosures you received when you opened your account, along with the APRs for cash advances and your penalty APR.
Your monthly card statement should also state your APR for different kinds of balances toward the end of the statement. If you have an online card account, you can also find your APR on the account information section.
Another way to get your APR is to call your issuer directly, using the customer service number on your account.
Make sure you check your APR when applying for credit cards and managing the ones you already have.
Is there a credit card that offers a low APR?
CEFCU offers members a Platinum Mastercard® with a low, variable rate and no annual fee, no minimum interest charge, and no gimmicks (ever!).
Not yet a cardholder?
Apply online today. As always, CEFCU cardholders can rely on all our credit card advantages.
- Mastercard Disclosure
- Required Documents for Loan Requests
- Guide to Benefits for Cardholders
- Digital Wallets
- Money Management
Rates and terms subject to change without notice. All credit subject to approval.
