Penalty APR And When It Applies

The following contains detailed information about the important aspects of a credit card offer 1) APR for purchases The interest rate you pay, on an annual basis, if you carry over balances on purchases from one billing cycle to the next. If the card has an introductory rate, you will also see the rate that applies after the introductory rate ends. Multiple interest rates may be listed here. Your rate will depend on your creditworthiness, which is based on your debt, income, credit score, and other factors, such as your history of paying bills on time. 2) APR for balance transfers The interest rate you pay, on an annual basis, if you transfer a balance from another card. Balance transfer

fees may apply, even if the balance transfer APR is 0%. If there is an introductory rate, pay attention to when that rate ends and what the new rate will be. 3) APR for cash advances The interest rate you pay if you withdraw a cash advance from your credit card account. Cash advance fees may also apply. Most credit card companies charge interest immediately, starting from the date you get the cash advance. 4) Penalty APR and when it applies Your credit card company may increase your interest rate for several reasons. For example, if you: a. pay your bill late, b. go over your credit limit, c. make a payment that is returned, or d. do any of these on another account that you have with the same company. Be sure to read the terms and conditions of your card to know what can cause your interest rate to go up. If you trigger the penalty rate, your credit card company must tell you that they will be raising your rate 45 days in advance of the increase. How long will the penalty APR apply? Credit card companies must tell you how long the penalty rates will be in effect. You may be able to go back to regular rates if you pay your bills on time for a period of time (for example, 6 months). Companies may not automatically remove the penalty rates. You may have to ask your credit card company to lower the rates. 5) How to avoid paying interest on purchases You can avoid interest charges on purchases by paying your bill in full by the due date. About 40 percent of U.S. households pay in full each month; the remainder, about three out of five U.S. households, carry a balance and pay interest on their credit card accounts. 6) Minimum interest charge Credit card companies often have a minimum interest amount. These charges typically range from $0.50 to $2 per month. Even if you carry over a low balance, you can be charged a minimum amount of interest. If the minimum interest charge is $1 or less, the company does not need to disclose this charge here. Example: Your balance is $25 and your APR is 12%. Your card has a minimum interest charge of $2. Based on your balance of $25, your monthly interest would be $0.25 (as calculated by the APR),...

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