Credit card APR explained

APR on a card is an annualized rate the issuer uses for interest on a balance. Purchase APR, balance-transfer APR, cash-advance APR, and penalty APR can all appear on the same account. They are not interchangeable. A marketing tile that shows one number is not the agreement.

A grace period, if the account has one, usually applies when you pay the statement balance in full by the due date. Carrying a balance can mean interest on new purchases as well. The card agreement — not a headline — is the rule set. If you only pay the minimum, interest continues to accrue on the remaining balance under the APR that applies to that balance type.

Issuers often describe purchase APR as a range based on creditworthiness, and they can change it with notice. Variable APRs often move with an index plus a margin. A Fed hold is not a personal rate quote. Whether your card reprices depends on the index named in the agreement and the issuer’s timing, not on a news alert.

APY on a savings account is a different convention. Mixing the two is a common error when policy rates, deposit yields, and card mailers sit in the same feed. APR here is a loan-cost figure. It does not include compounding the way a savings APY does, and it does not describe what you earn.

Penalty APR is a separate line. It is typically tied to late payment or other default triggers in the agreement. It is not the everyday purchase APR, even if both are printed on the same Schumer box. Cash-advance APR and fees are usually less favorable than purchase APR. Balance-transfer APR, when offered, has its own window and often a fee.

DontPanic does not rank cards or tell you which APR to take. Read the Schumer box on the offer and the account agreement you already have. If those two disagree with a blog, the agreement wins.

Utilization, due dates, and how the issuer applies payments across APR types are also in the agreement. This page is a map of the rate labels, not a payoff plan.

Not an offer of credit and not advice to carry a balance.