Let’s talk credit cards. Knowing your APR is key to smart money moves. APR shows what borrowing costs you – it’s the yearly rate that includes interest and fees.
Table of Content
- How does credit card APR work?
- What affects your credit card APR?
- When is credit card APR charged?
- How to lower your credit card APR?
- What’s the difference between APR and interest rate?
- How does APR impact minimum payments?
- What are the types of credit card APR?
- How to avoid paying credit card APR?
- What is a good credit card APR?
- How does APR compound on credit cards?
- Can APR change after getting a card?
- How to compare credit card APRs?
- What happens if you only pay minimum?
APR know-how saves big bucks – whether you’re getting a new card, carrying debt, or doing balance transfers. We’ll cover all your APR questions with real stories and pro tips.
My mom stole 8k from me and opened credit cards in my name.
-
SSTralala: Credit companies with mountains of evidence of literal fraud: “Nothing we can do.”Credit companies when a relative has died: “Send us the body or we’ll keep charging fees.”
-
SpoppyIII: I’m confused. Her emergency surgery was donating eggs? How is that an emergency surgery? Did I miss something?
-
CindySvensson: How old is the brother? I hope OOP will call CPS. I understand she is afraid due to the abuse, I just hope she tries to save her brother. He might be taking beatings as well.
-
CoffeeWithDreams89: I’m suspicious this isn’t true. When you unfreeze your credit it’s not left open, you can set it to freeze again after your get your application squared away.
Heloc is Killing me what should I do?
-
Danixveg: Based on your posting history, etc. you have a massive spending problem on home improvements and other hobbies. You need to get that in check before making any decisions.
-
User-NetOfInter: You’re spending too much money. Period.Need to cut back on spending to get out from under the debt
-
grandoldtimes: Your wife needs an evening job opposite hours of you. She watches the kids during the day and you watch the kids evenings/weekends. You have a not enough income problem.
-
Total_Essay4238: Your budget is incomplete. Looks like you need a real budget. With 100k (10k/m), even if it’s gross, this should be doable. Want to add a more detailed budget?
I just found my husband has 45K dollars in secret credit card debt.
-
deleted: Compulsively lying about inane shit like the car title means that the range of things he could be spending the money on is like.. everything. Might be hookers and blow, might be a vintage Pokémon collection.
-
SeaReturn7244: Maybe a PI could help solve the mystery? Depending on where you live, If he’s had an affair and it can be proven- you would be entitled to more.
-
Weaselpanties: He 100% has a mistress. That’s why he’s still hiding where the money went while intent on making her look like the villain – it’s straight outta the cheater’s playbook.
-
TinyBearsWithCake: $10,000 loans spent as… vacation petty cash? Unless OOP has a habit of buying diamonds from street vendors, this dude has lies always ready, but they sure aren’t slick!
Over $100,000 in debt at 35, while also making about $100,000
-
WaterGuy450r: Dave Ramsey.. he’s kind of crazy, but it works. Your gonna have to sell your car.. but you can be debt free quicker than you think.
-
antiBliss: Go to r/personalfinance and post your situation, you’ll get great adviceThe positives are you’re young(ish), single, and fairly high earning. You can dig yourself entirely out of this in like 2 hard years.
-
robgut32: Caleb hammer enters chat. I don’t watch his stuff just the short reels when they pop up. I guess you can check his YouTube out to see if they are helpful
-
Common-Spray8859: Dave Ramsey brother cash is king so cut those cards in half and get Dave’s books on getting debt free.
How does credit card APR work?
APR is just the yearly interest rate on what you owe.
Card APRs usually change with the prime rate, unlike fixed loans. Say you’ve got $1,000 at 18% APR – that’s $180 in yearly interest.
However, most cards calculate interest daily using the formula: (Daily Periodic Rate) x (Average Daily Balance) x (Number of Days in Billing Cycle). Daily rate? Just divide APR by 365 days. The CFPB says average APR hit 22.77% in May 2023. Mint’s Sarah Johnson says: \ One vacation cost $5,000 but ballooned to $7,200 with minimum payments at 24% APR over two years.
What affects your credit card APR?
Your APR depends on a few things, but credit score matters most.
Great credit (720 ) can get 12% APR, but risky borrowers pay 25% or more. When the Fed raises rates, most variable APRs go up too.
Rewards cards usually cost more APR-wise than basic ones. Bankrate found secured cards average 22.99% APR, while student cards sit at 20.24%. Pay late often? Your issuer might hike your APR. Mike Chen bounced back from bankruptcy: \ But after 18 months paying on time, they dropped it to 19.99%.
When is credit card APR charged?
You only pay APR if you don’t clear your balance during the 21-25 day grace period.
Pay the full balance by the due date? No interest for you. But cash advances start charging APR right away – no grace period.
Balance transfers get grace periods too, though fees might apply. Watch out – some 0% APR deals hit you with back interest if you don’t pay up in time. Blogger Jessica Moreno got burned: \
How to lower your credit card APR?
Call your issuer to haggle for lower APR – especially if you’ve paid on time for years.
LendingTree found 70% who asked got rate cuts, averaging 6% lower. Moving debt to 0% APR cards helps short-term, but watch for 3-5% transfer fees.
Boost your credit score with on-time payments and lower balances to score better rates. Debt consolidation loans usually beat cards with lower fixed APRs. Coach David Park says: \
What’s the difference between APR and interest rate?
People mix up APR and interest rate, but they’re not quite the same.
Interest rate is the basic cost; APR adds in fees like annual charges. For many cards, they’re the same because there’s no extra fees.
The law makes them show APR because it’s the real yearly credit cost. Loan officer Emily Tran says: \
How does APR impact minimum payments?
Bigger APRs mean bigger minimum payments – usually 1-3% of what you owe plus interest.
$10,000 at 25% APR? That’s $300 minimum. At 15%, just $150. Minimum payments mostly cover interest – barely touch what you actually owe.
CFPB says $5,000 at 20% APR takes 24 years on minimums – costing $8,332 total. Teacher Robert Gibson: \
What are the types of credit card APR?
Credit cards have multiple APRs for different transactions: Purchase APR for regular buys, Cash Advance APR (usually 5-10% higher), Balance Transfer APR, and Penalty APR (up to 29.
99%) for late payments. Some cards give 0% APR for 12-21 months on purchases or transfers.
Variable APRs move with prime rate; fixed APRs stay put (but are rare now). The 2009 law makes card companies explain what triggers penalty APRs. Prof Alan Cole warns: \
How to avoid paying credit card APR?
Easiest APR hack? Pay the full balance during the grace period every month.
Autopay means you’ll never pay late. Got debt? Knock out high-APR cards first (that’s the avalanche method).
Debit cards or cash mean zero APR worries. Credit unions sometimes give members cards with APRs as low as 8%. Business owner Lisa Yang: \
What is a good credit card APR?
As of 2023, a good APR is below the national average of 22.
77%. Great credit scores under 15% APR; fair credit (580-669) gets 20-25%.
Credit unions usually beat big banks by 5-10% APR. 0% intro APRs rock – if you can pay up before the deadline. NerdWallet says top low-rate cards in 2023 had 12.99%-18.99% APR. Analyst Mark Harris says: \
How does APR compound on credit cards?
Cards usually compound interest daily – they calculate it each day on what you owe.
Here’s the math: daily balance × daily rate = daily interest. Add up each day’s interest for your monthly total.
Daily compounding makes APR cost more than it looks – 20% APR really works out to about 22% yearly. As Buffett said: \ For real: $2,000 at 24% APR? That’s about $3.94 in daily interest.
Can APR change after getting a card?
Yep, card APRs can change – they’ll give you 45 days notice.
The law makes them explain rate hikes – like market changes, your credit score drop, or late payments. Penalty APRs (up to 29.
99%) can apply after 60 days delinquency. Some cards have APR floors (minimum rates) even if the prime rate drops. The Federal Reserve found 45% of cardholders saw APR increases when the Fed raised rates in 2022-2023. Consumer advocate Rita Davis notes: I’ve seen clients APRs jump from 16% to 28% after one late payment, adding hundreds in annual interest.
How to compare credit card APRs?
When comparing cards, look beyond just the APR – consider annual fees, rewards, and grace periods. Use the Schumer Box (standardized APR disclosure) to identify all possible rates.
Compare variable APRs by checking the index (usually Prime Rate) and margin (the issuer’s added percentage). Websites like Credit Karma or NerdWallet offer APR comparison tools. Financial planner Tom Lee suggests: Create a spreadsheet comparing total costs over 1-3 years based on your expected spending and repayment pace – a card with $100 annual fee but 12% APR might beat a no-fee 18% APR card if you carry balances.
What happens if you only pay minimum?
Paying only the minimum dramatically extends repayment time and increases total interest paid.
At 20% APR, a $5,000 balance with 2% minimum payments takes over 30 years to repay, costing $9,000 in interest. Your credit utilization remains high, potentially lowering your credit score.
After 60 days delinquency, penalty APRs and late fees apply. The National Foundation for Credit Counseling reports 38% of clients seeking debt help cited minimum-payment traps as their primary issue. Chef Marco Ruiz shares his experience: I was paying $75 monthly on a $3,500 balance at 24% APR. After two years, my balance was $3,200 because 80% of each payment went to interest.
Understanding credit card APR empowers you to make smarter borrowing decisions and avoid costly pitfalls. Whether you’re comparing cards, negotiating rates, or strategizing debt repayment, remember that small APR differences can translate to significant savings over time.
Take action today by reviewing your current cards APRs, considering balance transfer options if appropriate, and creating a payoff plan for any high-interest debt. Your future self will thank you for the financial breathing room.
