An ideal APR does not affect you too much. Knowing what this number is and how it could affect your finances is a good idea.

What is APR?

APR, or annual percentage rate, is a measure of the cost of credit. It tells you how much interest you will pay over some time. It’s calculated as a yearly rate and includes any fees connected with your purchase. The APR can be expressed differently, but it’s most often expressed as an annual rate (as in “4 percent APR”).

In general, the lower your APR, the better. You’ll pay less for your dollar-based loans or revolving credit cards (like credit card debt).

How does APR work?

If you are wondering what is purchase APR, keep reading.

APR stands for Annual Percentage Rate. APR is the interest rate charged on the balance of your credit card purchases, and it’s also what you’ll see in small print on your monthly statement. If you want to know how much interest will be added to your account, simply multiply the APR by the amount of your purchase, then divide that number by 12 (months). For example: if you make a $500 purchase at 10% APR and pay off your balance within six months, then half of that interest ($25) will get added to your bill.

According to SoFi experts, “Card issuers may charge different annual percentage rates (APRs) for different types of balances such as purchases, balance transfers, cash advances, and others. You may also be charged a penalty APR if you’re more than 60 days late with your payment.

What are the types of APR?

The APR is the annual percentage rate for the credit card. It includes all fees, interest charges and other costs that are associated with your account.

There are several different types of APRs, including:

  • Variable APR: This type of APR fluctuates based on how much money you owe and how well you pay it back.
  • Fixed APR: Your rate remains constant throughout the life of your account or until you close it down by paying off any debts owed and then requesting a lower payment plan.
  • Introductory or special offer rates: These introductory rates usually last between six months to two years before being raised to a standard rate (usually between 12% – 24%).

Other types of APRs may include penalty APRs, default APRs, and deferred interest APRs (also known as promotional zero percent financing).

What Must Be an Ideal Apr?

The ideal APR would have the lowest possible APR, low-interest rate, and minimum payment. It would also have the lowest annual fee, late fee, penalty rate and cash advance fee. On top of that, it should be able to offer zero balance transfer fees as well. Everyone should look for this when shopping around for an APR card.

How do I find my credit card APR?

You can find your APR in a few different places.

  • On the credit card statement.
  • On the credit card website.
  • On the credit card application.
  • In the terms and conditions of the account (this isn’t required, so you won’t always see it).
  • A disclosure statement is sent out before you open an account (again, this isn’t required).

So what is APR? The average person may not even know what APR is, let alone how to find their credit card APR rate. But it’s important that you do because this number can be used as a benchmark. So, did this article help you? Read more to increase your awareness of APR.