A credit card can have multiple interest rates that apply at different times. The main rate is known as the Purchase APR or Standard APR for Purchases . This is the fee that applies when you use your card in a store, restaurant, or to buy online. However, that is probably not the only APR listed on your credit card statement.
Promotional / Introductory APR
This is a special rate that applies for a period of time after the account is opened.
- In most cases, it offers 0% APR for 6-24 months, depending on your credit score.
- After the promotional period ends, the standard APR for purchases takes effect.
Balance transfer APR
This is the rate that applies to balances that you transfer to the card from other accounts.
- Balance transfers offer a type of debt consolidation, because they allow you to combine multiple balances on a single card.
- These cards typically offer promotional periods, such as 0% APR or low APR on transfers for 6, 12, or 18 months.
- However, once the promotion period ends, this rate tends to be higher than the standard rate for purchases.
Cash advance APR
This rate applies only to the cash you withdraw if you use your credit card at an ATM.
- You can use a credit card to withdraw cash just like a debit card, but interest charges apply.
- This rate tends to be much higher than most other rates on the card.
- Most experts do not advise using credit cards for cash advances, because this rate is very high.
Penalty APR
This is the rate that the creditor imposes if you do not make a payment for more than 60 days.
- Instead of applying the regular purchase APR, they apply a penalty rate.
- Average Penalty APR is 29.99%
- You must make six consecutive payments on time to remove the penalty APR and restore your standard rate.
