What is APR on a Credit Card? | What does APR mean?

In this article, I am going to teach you “What is APR on a Credit Card?“. Okay, let’s move on to the article.

What is APR on a Credit Card and What does APR mean?

If you’re going to apply for a credit card then you should know “What is APR and What does APR mean?“. APR is an abbreviation of the Annual Percentage Rate. An annual Percentage Rate(APR) is a measure that includes interest rate and other charges to get the loan but that’s not the case on a credit card, the APR and Interest Rate are the same.

APR on a credit card is determined based on credit score. To get a low APR on a credit card, you need to have good credit. If you can’t get a credit card due to a bad credit score don’t worry! you can build a credit score with the help of a Secured Credit Card.

what is apr on a credit card?

Fixed APR vs Variable APR

There are two types of APR. Those are,

  • Fixed APR
  • Variable APR

Fixed APR

Fixed APR does not change for a period of time. Nowadays it is hard to find fixed-rate credit cards.

Variable APR

Variable APR will change when the prime rate changes. Most credit card issuers are using variable APR.

What are the Different Types of APR?

There are 5 types of APR. Those are,

  • Purchase APR
  • Balance Transfer APR
  • Cash Advance APR
  • Introductory APR
  • Penalty APR

Purchase APR

Purchase APR is the interest rate charged when you make purchases using a credit card.

Balance Transfer APR

Balance Transfer APR is the interest rate charged to transfer the credit card balance from one to another.

Cash Advance APR

Cash Advance APR is the interest rate charged when you withdraw money from ATM using a credit card.

Introductory APR

The introductory APR is the interest rate offered for a fixed period of time when you get a new credit card. Usually, the Introductory APR is less than the Regular APR and sometimes it will be 0%.

Penalty APR

The Penalty APR is the interest rate charged when you make late payments or you exceed the credit limit.

Interest Rate vs Annual Percentage Rate(APR)

APR stands for Annual Percentage Rate. APR is a yearly measure that includes interest rates and other charges to get the loan but for credit cards, the interest rate and APR are the same. For other loans except for credit cards, APR will be higher than the interest rate.

What is a Good APR on a Credit Card?

I am going to answer the following questions.

  • Is 25% APR high for a credit card?
  • Is 25% APR on a credit card bad?
  • Is 7% APR good for a credit card?
  • Is 20% APR bad for a credit card?

First of all, I would like to let you know that APR on a credit card is determined based on credit score. The average credit card APR is above 20% so if you qualify for a credit card with 20% to 29.99% APR it is good. To get a low APR on a credit card, you need to improve your FICO Score.

Frequently Asked Questions

What does APR stand for?

APR stands for Annual Percentage Rate.

What is a good APR on a credit card?

A good APR on a credit card is 20% to 29.99%. You need to have a good credit score to get a low APR.

Final Words

I hope this article helped you to know “What is APR on a Credit Card?“. If you have any queries regarding this topic please ask via the comment section. I’ll help you to clear up your doubts. Please share this article with your friends and family.

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Hi, I'm Ranjith a full-time Blogger, YouTuber, Affiliate Marketer, & Founder of Gomercury Pre Approved Application. Here, I post articles about Gomercury.

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