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What is purchase APR?

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When you borrow money — whether you’re making a purchase on a credit card, applying for a car loan or taking out a mortgage — your bank or credit issuer has the right to charge interest on the money you borrow. When you use credit cards to borrow money, this interest often comes in the form of purchase APR. Although purchase APR is not the only type of interest rate that a credit card issuer might charge, it is the most common interest rate associated with credit cards.

In most cases, purchase APR is the interest applied to any credit card purchases that aren’t paid off in full before the credit card grace period ends. However, there are a lot of other factors — like introductory rates or penalty rates — that can make credit card APR a little more complicated.

What is purchase APR?

The regular purchase APR is the interest rate applied to purchases as long as no other APR takes precedence. APR is usually a variable interest rate. This means that your purchase APR could shift up or down depending on the prime interest rate.

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Credit card debt is getting more expensive. The federal reserve has hiked interest rates significantly this year, which means your APR is likely around 3 percentage points higher than it was at the start of 2022.

If you’re planning to carry a balance on a credit card, the purchase APR is an important number to keep in mind. It can make a huge difference in how much interest you’ll pay over time.

For example, if you make a $3,000 purchase on a card with a 15 percent APR and put $200 towards your credit card bill every month, you’ll pay off your balance in 17 months and pay a total of $343 in interest. If you make a $3,000 purchase on a card with a much higher 25 percent APR, it will take an extra two months to pay off your debt with the same $200 monthly payments, and you’ll pay almost double the interest — a total of $634. For more in-depth examples, read our guide to how credit card interest works.

Other types of APR

Making new purchases is the most common type of credit card transaction, so purchase APR is usually the most important figure to remember. But there are several circumstances when a different APR may apply.

  • Balance transfer APR — Debt transferred from another credit card (this is known as a balance transfer) may have a different APR than new purchases.
  • Cash advance APR — Money you take out as a cash advance may also have its own APR, usually higher than the purchase APR.
  • Introductory APRTo get new cardholders, credit card issuers often offer 0 percent APR for purchases, balance transfers or both for a limited time.
  • Penalty APR — This can kick in after you fail to make payments for a certain time, usually around 60 days. At this point, your regular purchase APR will be replaced with the higher penalty rate, and it will apply to your existing and future balances for at least six months.

How much can you save with an introductory APR?

Some credit cards offer introductory APRs that are lower than the regular purchase APR. In most cases, these credit cards will offer zero interest for a specific period of time — often for 12 or 18 months.

Let’s go back to the example above. If you make a $3,000 purchase on a credit card with 18 months of 0 percent intro APR, those same $200 monthly payments will knock out your debt in 15 months. That means you won’t pay any interest on that balance, since you’ll have it paid off in full before your introductory 0 percent APR period ends.

The best 0 percent APR credit cards can help you pay down any balances you charge (or transfer) to the credit card before the 0 percent introductory rate expires. When your intro APR period ends, the credit card issuer will begin applying the regular purchase APR to any balance remaining on the card, as well as any new purchases you charge.

How to find your current purchase APR

There are two ways to find your current purchase APR:

  • Read your monthly credit card statement: Your current purchase APR can be found in a section labeled “Interest Charge Calculation” on your monthly credit card statement.
  • Check your online account or app: You can also find your purchase APR by logging into your credit card account and reviewing your credit card details. You can even use your online account to pull up your most recent credit card statement.

If your credit card is currently offering a promotional or introductory APR, your statement will also let you know how much longer the promotional APR will last. That way, you can be prepared to pay interest on any balances remaining after your 0 percent intro APR ends. Learning how to read your credit card statement will help in this process.

The bottom line

Purchase APR is the interest rate that applies to purchases you make with a credit card. Other transactions, like cash advances and balance transfers, may have different APRs.

Remember that the regular purchase APR applies when no other interest rate takes precedence. If your credit card has an introductory interest rate, for example, the regular purchase APR will kick in when the intro rate expires. If you want to know your current purchase APR, check your credit card statement or log in to your account.

Written by
Nicole Dieker
Personal Finance Contributor
Nicole Dieker has been a full-time freelance writer since 2012—and a personal finance enthusiast since 2004, when she graduated from college and, looking for financial guidance, found a battered copy of Your Money or Your Life at the public library. In addition to writing for Bankrate, her work has appeared on CreditCards.com, Vox, Lifehacker, Popular Science, The Penny Hoarder, The Simple Dollar and NBC News. Dieker spent five years as writer and editor for The Billfold, a personal finance blog where people had honest conversations about money. Dieker also teaches writing, freelancing and publishing classes and works one-on-one with authors as a developmental editor and copyeditor.
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