APR stands for Annual Percentage Rate. It is the interest rate incurred by credit cardholders on their outstanding dues if they fail to pay their bills in full. In simpler terms, it can be referred to as credit card interest rate. Card issuers prefer to mention both the monthly interest rate and APR in the terms and conditions document. For example, SBI Elite Credit Card Monthly Interest Rate is up to 3.35% and its APR is up to 40.2%.
Types of Credit Card APR
Based on the type of transaction or penal terms of the issuer, you may be charged different APRs. Broadly, four types of APR can be applicable on a credit card.
Purchase Annual Percentage Rate – When we talk of APR this is the one that is usually referred to. It becomes applicable when you fail to clear your due amounts in full by the due date. It is calculated on a daily basis, from the date of purchase until the amount is paid off. Click here to see how credit card interest rate is calculated.
Cash Advance APR –Annual Percentage Rate (APR) will also be applicable in case of cash withdrawals. For most card issuers, Purchase APR and Cash Advance APR remain the same. However, others may charge a different APR for cash advances, usually higher than the purchase APR. Cash Advance APR is calculated from the date of withdrawal till the amount is paid off. It is applied on an everyday basis.
Cash withdrawals via credit card are one of the most expensive forms of credit that you can avail. Do not use your credit card to withdraw cash unless absolutely necessary.
Penalty APR – Certain banks start charging a higher APR when a customer fails to pay the full bill amount by the due date for more than 2 months. This is called Penalty APR. The penalty APR rate is removed when the customer starts paying their bill in a timely manner.
Balance Transfer APR – Credit card providers allow you to transfer your outstanding card dues from other banks/NBFCs card to theirs. Such transactions will incur a lower level of APR called Balance Transfer APR. Issuers may also offer 0% APR deals on balance transfers for a limited period (say 6 months).
Suggested Read: 7 Credit Card Fees and Charges You Must Be Aware Of
Low Interest Rate Credit Cards in India
Credit Card APR usually ranges from about 38-42% p.a. However, there are some cards that charge a lower APR. Some of the low-interest rate credit cards in India are given below.
|Credit Card||Annual Percentage Rate (APR)|
|HDFC Bank Infinia Credit Card||23.88%|
|HDFC Diners Club Black Credit Card||23.88%|
|YES FIRST Exclusive Credit Card||32.92%|
|Axis Bank Vistara Infinite Credit Card||41.7%|
|Axis Bank Burgundy Private Credit Card||19.56%|
|Axis Bank Magnus Credit Card||34.49%|
Suggested Read: Best Low Interest Credit Cards in India
Credit Card APR – FAQs
Is credit card interest rate and Annual Percentage Rate the same thing?
Credit card providers can share the interest rate on a monthly basis or yearly basis. When the interest rate is depicted in a yearly or per annum basis then it is called Annual Percentage Rate.
How can I lower the APR that the bank charges me?
Changing the APR is completely at the issuer’s discretion. Users cannot request a low APR. However, you can become financially responsible and pay all your bills in full and on time to avoid paying this interest.
What is 42% APR on a credit card?
If a credit card states that it comes with a 42% APR then it charges an annual interest rate of 42%. In other words, the monthly interest rate is 3.5%.
Do all credit cards have APR?
Credit cards provide a line of credit to the user. This comes with an interest rate. So yes, all credit cards charge an Annual Percentage Rate.
Is APR charged monthly?
APR, Annual Percentage Rate, as the name suggests is the yearly/annual interest rate charged. However, most of the credit cards charge interest on a daily basis. APR stands as the deciding number on the basis of which monthly and daily interest will be calculated.