What is a purchase APR on a credit card? – The Points Guy


If you’re new to the world of credit, you might be confused by several frequently used abbreviations. One of the most important ones is annual percentage rate. In short, APR is the amount you are charged by a lender or credit card issuer for borrowing money on an annual basis.

When it comes to installment loans such as personal loans or auto loans, the APR encompasses both the interest and fees imposed by the lender. However, for credit cards, the APR solely refers to the interest rate and does not include any annual fees that may be applicable.

Keep reading to learn more about purchase APR and what it means for your bottom line.

How purchase APRs work

The purchase APR of a credit card is the interest rate that applies to purchases when no other APR takes priority.

There are a few other types of APR you might come across. Your card might have an introductory APR — a limited-time promotional interest rate — or a cash advance APR — the rate for borrowing cash. However, purchase APR will be the focus here.


Suppose you anticipate carrying a balance on your credit card. In that case, the purchase APR is a crucial factor to consider, as it can significantly impact the amount of interest you will accumulate over time.

If you don’t pay off your card regularly and allow APR to kick in, that interest can stack and hurt your wallet. Being mindful of the purchase APR is essential for making informed decisions about managing your credit card balance and minimizing interest costs.

What is a good APR?

Determining whether a credit card’s APR is good or not is a subjective matter. The average credit card APR has surpassed 20% in 2023, per the Federal Reserve. Therefore, finding an APR below the average could be considered favorable.

To explore current credit card options with low APRs, refer to our comprehensive guide on the best 0% interest credit cards. This resource is an excellent starting point for your research and can help you identify credit cards with competitive APRs.

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How purchase APRs can change

Purchase APR can either be fixed — remaining constant over time — or variable — meaning it can change periodically based on the prime rate, which banks use to determine interest rates in general.

Understanding whether your purchase APR is fixed or variable is essential in comprehending how your card’s interest charges may fluctuate over time.


Also, be aware that failing to make your monthly minimum payment for 60 days or more can result in the loss of a lower purchase APR. In such cases, your credit card issuer may impose a penalty APR, leading to higher interest charges. To prevent this situation, it is essential to consistently make your minimum credit card payment on time.

Is APR the same as the interest rate?

Remember that the regular purchase APR comes into effect when no other interest rates are in place. For instance, if your credit card has an introductory interest rate, the regular purchase APR will be applicable once the introductory period concludes.

To find out your current purchase APR, you can review your credit card statement or access your account through the online platform. This will provide you with the necessary information regarding the interest rate that applies to your purchases.

Bottom line

If you expect to carry a balance on your credit card, your purchase APR will be a vital consideration, as it significantly affects the amount of interest you will accumulate over time.

To ensure that your purchase APR is as low as possible, find a card that makes sense for your wallet — and try to follow TPG’s 10 commandments of credit card rewards to maximize your earnings going forward.


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