‚What Is a Good Credit Card APR?

A couple of key factors go into determining your rate.

When it comes to credit cards, the annual percentage rate is probably the most important number to know. But what exactly is an APR – and what does it mean for your bottom line?

Any time you borrow money from a financial institution, you are charged interest on the outstanding balance. Credit cards are no exception.

If you carry a balance from one month to the next, you are charged interest on the total. Most credit cards compound interest daily or monthly, and the balance fluctuates month-to-month, so banks simplify your interest rate as the APR. This is a representation of how much interest you are charged over the course of a year. Even so, the APR is also used to calculate the amount of interest you owe each billing cycle.

Credit cards also have more than one APR associated with them. For instance, you might be charged a different APR on cash advances. Or if you miss a payment, your rate might switch to a penalty APR. It's important to review your entire credit card agreement and understand what APR you will pay under which circumstances.

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‚What Is a Good Credit Card APR?...
‚What Is a Good Credit Card APR?...
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