The Ultimate Guide to Credit Cards
Sunday, December 3, 2023

APR vs. Interest Rate: Is There a Difference? (Dec. 2023)

Apr Vs Interest Rate
Marcie Geffner

Written by: Marcie Geffner

Marcie Geffner
Marcie Geffner

Marcie Geffner is an award-winning reporter, editor, and writer. Her stories about banking, credit cards, insurance, economics, small business, and other subjects have been featured by the Los Angeles Times, Washington Post, Bankrate, Credit Karma, Bookmarks Magazine, FOX Business, CNBC, Yahoo! Finance, and dozens of major U.S. newspapers. Her articles have been cited in seven nonfiction books and two U.S. Congressional hearings. She edits nonfiction, memoir, and fiction, and contributes to Kirkus Reviews. Marcie holds a bachelor’s degree in English from UCLA and MBA from Pepperdine University.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro
Lillian Guevara-Castro

Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct journalism instructor at the University of Florida. Today, Lillian edits all CardRates content for clarity, accuracy, and reader engagement.

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Reviewed by: Ashley Fricker

Ashley Fricker
Ashley Fricker

Ashley has more than a decade of experience as a finance contributor and editor, and has specialized in the credit card industry since 2015. She has worked closely with the world’s largest banks and financial institutions, up-and-coming fintech companies, and press and news outlets to curate comprehensive content and media. Her credit card commentary is often featured on national media outlets that include CNBC, MarketWatch, Investopedia, and Reader's Digest, among many others.

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Advertiser Disclosure

Borrowing money often involves fees. One such fee is interest, which is calculated as a percentage of the amount you owe. The percentage is the interest rate.

For example, if you borrowed $1,000 for one year with an interest rate of 4%, you’d owe $40 of interest. An interest rate that’s calculated on a yearly basis is known as an annualized percentage rate (APR).

An APR always includes interest. It may also include other fees related to the loan. For example, if you applied for a home mortgage, your APR would include the lender’s fees as well as the interest rate.

With credit cards, the APR typically doesn’t include other fees, such as an annual fee, balance transfer fees, late payment fees, or foreign transaction fees, which may also be charged. When an APR includes interest, but no other fees, the APR and interest rate will be the same — this is true for most card rates.

The 4 Types of Card APRs

Most cards have more than one type of APR. Four common card APRs are:

  • Purchase APR. This APR is applied to new purchases you make with your card and your card balance if you don’t pay it in full every month and you’re not paying an introductory or penalty APR.
  • Introductory APR. This APR is applied to your card balance for a specific period. It may also be applied to new purchases during that time period. The introductory period is usually at least six months and may be up to 18 months or longer. An introductory APR may be as low as 0%. This type of APR is sometimes called a promotional rate or promotional APR.
  • Cash Advance APR. This APR applies if you use your card to get cash, such as from an ATM or with cash advance checks. A cash advance is a form of debt. The APR for a cash advance is typically higher than the card’s purchase APR.
  • Penalty APR. This APR may be applied if you make a late payment or miss a payment. Like the cash advance APR, this APR is typically higher than the card’s purchase APR.

The differences between APRs can be substantial. For example, if you carried a $5,000 balance for one year, you’d pay no interest with a 0% APR, $389 of interest with a 14.99% APR, and $631 of interest with a 24.99% APR. If your balance was higher or you carried the debt longer, you’d pay even more interest with the same APRs.

Most card APRs are variable, which means they can change over time. An APR may change because market rates changed, or your credit score went up or down. If your card’s APR increases, you’ll have to pay more interest to carry the same balance.

A card’s APRs must be disclosed in the cardholder agreement. APRs may also be shown on your monthly statement.

How to Use APR to Calculate Interest

Although APRs are annualized rates, card issuers don’t actually charge interest annually — they charge interest daily. That’s why you should be aware of your card’s Average Daily Periodic Rate (ADPR) as well as its APR.

If you carry a balance, it’s the ADPR that will be used to calculate how much interest you’ll be charged.

Your ADPR should be printed on your statement. This rate is typically rounded, so 16.987% would be shown as 16.99%, for example.

If your card’s ADPR isn’t equal to one 365th of its APR, it may be because your issuer uses a 360-day year rather than a 365-day year for its calculations. That may sound odd, but some issuers reportedly do it that way.

A “Good” APR Depends on Your Credit Score

Some cards charge a lower range of APRs while others charge a higher range. To qualify for the lowest ranges of card APRs, you’ll generally need good or excellent credit.

Your card’s APR may be higher than average if your credit rating is fair or poor. Whether a specific card has a “good” APR depends on the range of APRs for that card and your credit history.

Chart of Estimated APRs by Credit Score

For example, if you have excellent credit, a 30% card APR probably wouldn’t be considered a good APR for you. If you’ve had some issues with credit, that same 30% APR may be the best you’ll be offered.

How To Get a Lower Credit Card APR

A low APR may save you a lot of money if you carry a balance on your credit card. Here are four ways you may be able to get lower APR:

1) Apply for a new balance transfer card with a 0% introductory balance transfer offer.

You may have to pay a balance transfer fee to move your balance to the new card, and the introductory 0% APR may not apply to new purchases with that card, but your APR could drop significantly, making it easier for you to pay off your balance.

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

  • 0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening. After that the variable APR will be 18.24% - 28.99%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
  • There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
  • Get free access to your FICO® Score online.
  • With Citi Entertainment®, get special access to purchase tickets to thousands of events, including concerts, sporting events, dining experiences and more.
  • No Annual Fee - our low intro rates and all the benefits don’t come with a yearly charge.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% 12 months on Purchases
0% 21 months on Balance Transfers
18.24% - 28.99% (Variable)
$0
Excellent, Good

Additional Disclosure: Citi is a CardRates advertiser.

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

  • No Late Fees, No Penalty Rate, and No Annual Fee... Ever
  • 0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening. After that the variable APR will be 19.24% - 29.99%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
  • There is an introductory balance transfer fee of $5 or 3% of the amount of the transfer, whichever is greater for balances transfers completed within 4 months of account opening.
  • Stay protected with Citi® Quick Lock
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR Period 12 months on Purchases
0% Intro APR Period 21 months on Balance Transfers
19.24% - 29.99% (Variable)
$0
Excellent, Good Credit

Additional Disclosure: Citi is a CardRates advertiser.

0% BALANCE TRANSFER RATING

★★★★★
4.8

OVERALL RATING

  • Start off strong with 0% Intro APR for 18 months from account opening on purchases and balance transfers. A variable APR of 20.49% - 29.24% on balance transfers and purchases after the introductory period ends.
  • Lower your interest rate by 2% each year. Automatically be considered for an APR reduction when you pay on time, and spend at least $1000 on your card by your next account anniversary.
  • Raise your credit limit. Get an automatic, one-time review for a higher credit limit when you pay on time, and spend $500 in your first six months.
  • All for no annual fee - You won't have to pay an annual fee for all the great features that come with your Slate Edge℠ card
  • Keep tabs on your credit health - Chase Credit Journey helps you monitor your credit with free access to your latest score, real-time alerts, and more
  • Member FDIC
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 18 months
0% Intro APR on Balance Transfers 18 months
20.49% - 29.24% Variable
$0
Good/Excellent

2) Apply for a new card with a lower APR.

If you didn’t shop for a card with a low APR when you applied for the cards you have or if you’ve improved your credit since then, a new card could be your ticket to a lower APR.

If your credit isn’t good, you may need to raise your credit scores by making your payments on time before you’ll be approved for a card with a low APR.

Discover it® Cash Back Review

at Discover Card'ssecure website

LOW APR RATING

★★★★★
4.8

OVERALL RATING

  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
  • Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.
  • Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
  • Every $1 you earn in cash back is $1 you can redeem
  • Get a 0% intro APR for 15 months on purchases. Then 17.24% to 28.24% Standard Variable Purchase APR applies, based on credit worthiness.
  • No annual fee.
  • Terms and conditions apply.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 months
0% Intro APR for 15 months
17.24% - 28.24% Variable APR
$0
Excellent/Good
USAA Rate Advantage Visa® Platinum Credit Card Review

at Usaa Savings'ssecure website

LOW APR RATING

★★★★★
4.8

OVERALL RATING

  • Get a 0% intro APR for 15 months on Balance Transfers and Convenience Checks that post to your account within 90 days of account opening. After this time, the Variable Regular APR will apply to your balance.
  • Our lowest-rate card: Pay less in interest if you carry a balance from month to month
  • Travel benefits include Auto Rental Coverage, Travel Accident Insurance, Baggage Delay and Reimbursement, and Trip Cancellation and Interruption Coverage
  • No annual fee or foreign transaction fees
  • This offer is only open to members of military-affiliated groups and their families
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
0% for 15 Months
9.15% - 26.15% (Variable)
$0
Good to Excellent
Navy Federal Visa Signature® Flagship Rewards Credit Card Review

at the issuer'ssecure website

LOW APR RATING

★★★★★
4.8

OVERALL RATING

  • Earn 40,000 Bonus Points when you spend $4,000 within 90 days of account opening
  • Free year of Amazon Prime®
  • Receive 3X points on travel purchases and 2X points on everything else
  • Receive statement credits (up to $100) for Global Entry or TSA Pre✓®
  • No balance transfer fees, foreign transaction fees, or cash advance fees
  • Worldwide Automatic Travel Accident Insurance, plus travel and emergency assistance
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
14.24% - 18.00% Variable
$49
Very Good/Excellent

3) Apply for a new secured card.

Secured cards don’t always have the lowest APRs, but you may find some with lower APRs than the cards you already have. To get a secured card, you’ll have to make a deposit, which serves as security, or collateral, for your card debt.

Secured Chime Credit Builder Visa® Credit Card Review

at the issuer'ssecure website

SECURED RATING

★★★★★
4.9

OVERALL RATING

  • No credit check to apply
  • Adjustable credit limit based on what you transfer from your Chime Checking account to the secured account
  • No interest* or annual fees
  • Chime Checking Account and qualifying direct deposit of $200 or more required to apply. See official application, terms, and details link below.
  • The secured Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
  • *Out-of-network ATM withdrawal fees may apply. See here for details.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
N/A
$0
None
OpenSky® Secured Visa® Credit Card Review

at Capital Bank N.A.'ssecure website

SECURED RATING

★★★★★
4.8

OVERALL RATING

  • Limited Time Offer: $51 funding voucher applied for all new accounts. Get a $200 credit line for $149. Click “Apply Now” to see additional terms and conditions.
  • No credit check to apply. Zero credit risk to apply!
  • Looking to build or rebuild your credit? 2/3 of cardholders receive a 48+ point improvement after making 3 on-time payments
  • Extend your $200 credit line by getting considered for an unsecured credit line increase after 6 months - no additional deposit required!
  • Get free monthly access to your FICO score in our mobile application
  • Build your credit history across 3 major credit reporting agencies: Experian, Equifax, and Transunion
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
25.64% (variable)
$35
Poor
Discover it® Secured Credit Card Review

at Discover Card'ssecure website

SECURED RATING

★★★★★
4.7

OVERALL RATING

  • No credit score required to apply.
  • No Annual Fee, earn cash back, and build your credit history.
  • Your secured credit card requires a refundable security deposit, and your credit line will equal your deposit amount, starting at $200. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 7 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites. Activate for free.
  • Terms and conditions apply.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
10.99% Intro APR for 6 months
28.24% Variable APR
$0
New/Rebuilding

4) Call your credit card company and ask.

If you’re a good customer, you may be able to get a lower APR just by reaching out and requesting it. If you usually carry a balance and you typically make your payment on time, this one phone call could save you a lot of money and help you pay off your balance sooner.

Pay Your Balance to Avoid Interest Charges

If you don’t carry a balance, APRs aren’t relevant to you. If you do carry a balance, you should pay attention to APRs when you shop for new cards.

A card with a lower APR or 0% balance transfer offer could be a better card for you than one with more perks or rewards. The choice is yours.

Advertiser Disclosure

CardRates.com is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free, we receive compensation for referrals for many of the offers listed on the site. Along with key review factors, this compensation may impact how and where products appear across CardRates.com (including, for example, the order in which they appear). CardRates.com does not include the entire universe of available offers. Editorial opinions expressed on the site are strictly our own and are not provided, endorsed, or approved by advertisers.