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30Y FIXED6.85%↑ 0.02·15Y FIXED6.12%↓ 0.01·REFI 30Y6.78%↑ 0.01·HELOC9.20%0.00·JUMBO 30Y7.05%↑ 0.03·HYSA TOP4.85%↓ 0.05·12M CD5.10%0.00·24M CD4.85%↓ 0.02·5Y CD4.40%↑ 0.01·MMA TOP4.65%0.00·AUTO 60M NEW7.10%↓ 0.02·AUTO 60M USED8.45%↑ 0.04·PERSONAL EXC.8.20%0.00·10Y TREASURY4.32%↑ 0.01·30Y FIXED6.85%↑ 0.02·15Y FIXED6.12%↓ 0.01·REFI 30Y6.78%↑ 0.01·HELOC9.20%0.00·JUMBO 30Y7.05%↑ 0.03·HYSA TOP4.85%↓ 0.05·12M CD5.10%0.00·24M CD4.85%↓ 0.02·5Y CD4.40%↑ 0.01·MMA TOP4.65%0.00·AUTO 60M NEW7.10%↓ 0.02·AUTO 60M USED8.45%↑ 0.04·PERSONAL EXC.8.20%0.00·10Y TREASURY4.32%↑ 0.01·
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Glossary term

APR (Annual Percentage Rate)

What APR means on a credit card and how it differs between purchase, balance transfer, cash advance, and penalty rates.

What is APR?

APR stands for Annual Percentage Rate. On a credit card, it is the yearly interest rate the issuer charges when you carry a balance from one month to the next. If your card has a 24% APR, you are being charged roughly 2% per month on any unpaid balance.

One thing to know upfront: APR and APY are not the same. APR is a simple annual rate with no compounding built in. Your card's billing cycle does compound daily in practice, but the disclosed APR is stated as a flat annual figure. You can read more about the difference in the APY glossary entry.

Types of APR on a credit card

Most cards carry several different APRs, not just one:

  • Purchase APR: The rate that applies to everyday spending. This is the rate advertised in the big print. It often ranges from 18% to 29% depending on your credit profile and the card.
  • Balance transfer APR: The rate that applies when you move debt from another card. Promotional balance transfer cards offer 0% for a limited window (often 12 to 21 months), then revert to a standard rate. See the balance transfer glossary entry for more detail.
  • Cash advance APR: Usually 5 to 10 percentage points higher than the purchase APR, with no grace period. Read more under cash advance.
  • Penalty APR: Triggered by a late or returned payment. Can be as high as 29.99% and may apply to your entire existing balance, not just new charges.

Why APRs are stated as a range

When you see "18.99% to 28.99% APR" in a card offer, that range reflects the fact that the issuer has not yet checked your credit. Once you apply, your creditworthiness determines where in the range you land.

Why it matters

Carrying even a $1,000 balance at 24% APR for a full year costs about $240 in interest. That cost compounds quickly with larger balances. The best strategy is to pay your full statement balance each month and use the grace period to your advantage. If you want to estimate your real cost, use the APR calculator.

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