APR on credit card: A guide to why it is important

  • Updated on: 23 Nov 2023
  • Published on: 9 Nov 2023
APR on credit card: A guide to why it is important

The APR on credit cards can often make you hesitate when it comes to using this powerful tool in your financial arsenal. Fortunately, you can lower your credit card APR and avoid paying interest when you clear your bill in full. 

To learn about what is the annual percentage rate for credit cards, read on.

What is Credit Card APR?

The Annual Percentage Rate (APR) for credit cards refers to the amount of interest you have to pay on an outstanding balance at the end of each billing cycle. Credit card companies generally state the interest rates in the yearly format, known as APR. 

Types of Credit Card APR

Now that you have understood what is APR in credit card jargon, learn about the different types of APR that issuers charge. These include: 

Purchase APR

As its name suggests, the purchase APR on a credit card applies when you purchase a product or use a service. Under this type of APR, the charges you have to pay as interest depends on the amount you spend. 

Cash Advance APR

Some credit cards allow you to withdraw cash from an ATM or perform cash-like transactions. Hence, the cash advance APR refers to the interest rate applicable to such transactions. Note that a cash advance APR is generally higher than a purchase APR.

Penalty APR

Credit card issuers charge a penalty APR when you miss a payment or default on your dues. You must avoid this type of APR as it eliminates most introductory offers available on your card and negatively impacts your credit score. 

Balance Transfer APR

A balance transfer APR applies when you transfer the outstanding balance from one credit card to another. This type of APR is generally lower than the purchase APR applicable on the first card. 

Also Read: Credit Card Smart Payment 

How to get a lower APR from a Credit Card company?

Having a lower APR on credit cards is significant in reducing the interest due on unpaid balances, helping you manage your finances more effectively. Follow these tips to get a lower APR on your credit card. 

  1. Increase Your Credit Score: A higher credit score positions you as a low-risk borrower. Hence, you may get a lower APR on credit cards from issuers when you have a high credit score.
  2. Negotiate with the Issuer: If you have been a loyal and responsible customer of a bank, you can reach out and negotiate for a lower APR. Banks are usually willing to lower the rates to keep you on as a customer. 
  3. Make Full and Timely Payments: If you fail to make timely bill payments or default on your credit card dues, a penalty APR kicks in, which is much higher than other types of APRs. Thus, pay your credit card bill in full to avoid high-interest charges.
  4. Reduce Existing Debts: Decreasing your outstanding balance also helps in reducing the APR. Hence, ensure you pay more than the minimum balance in each billing cycle.

Also Read: How to improve your credit score?

Credit cards offer quick and easy access to credit, which is why they remain an attractive financial product. However, APR on credit cards can be as high as 50% p.a. So, plan your expenses and avoid any outstanding balance so the APR doesn’t apply. To maximise your benefits, apply for the Fibe Axis Bank Credit Card

From cashback to discounts on dining, this numberless credit card offers many benefits, and links to your UPI ID for greater safety. To get it now, apply on the Fibe App or register on our website. 

FAQs on Credit Card APR

How can I lower the APR on my credit card?

There are various strategies you can employ to lower your credit card APR. For instance, you can reduce your existing debt by making timely repayments to improve your credit score. You can negotiate for a lower APR with the credit card issuer based on a higher credit score.

Can you adjust the APR on a credit card?

No, you can’t adjust the APR on credit cards. However, you can negotiate with the issuer for a reduced credit card APR. 

What is a good APR for a credit card?

As per Experian, a good APR on a credit card is when the rates are in the low teens or below.

How do I get out of a high APR credit card?

If your credit card APR is high, you can opt for another credit card allowing a balance transfer with a lower APR. In this way, you can save significantly on the dues applicable to your outstanding balance.


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