Understanding APR: What It Means for Your Card
What Is APR?
APR stands for Annual Percentage Rate — the yearly interest rate charged on borrowed money. For credit cards, APR is applied to any balance not paid by the due date each month.
Purchase APR vs Promotional APR
The standard purchase APR applies to regular purchases. Many cards offer a 0% introductory APR for 12-21 months on purchases and balance transfers. After the intro period ends, the regular APR takes effect.
How to Avoid Paying Interest
Pay your statement balance in full every month and you will never pay a cent in interest. Credit cards offer an interest-free grace period between the statement date and payment due date.
Variable vs Fixed APR
Most credit cards have variable APRs tied to the prime rate. This means your rate can change when the Federal Reserve adjusts interest rates. Some cards offer fixed APRs that remain constant.