APR (Credit Card)
The annualized interest rate charged on unpaid credit card balances carried from month to month.
What is Credit Card APR?
Credit card APR (Annual Percentage Rate) is the annualized interest rate charged on unpaid balances that carry over from one billing cycle to the next. It differs from a loan APR in that most credit cards compound interest daily: the daily periodic rate (APR ÷ 365) is applied to the average daily balance each day. The Federal Reserve's Regulation Z requires issuers to disclose APR prominently. Credit card APRs typically range from around 20% to 30% for standard cards, and from 0% (introductory) to 29.99% for rewards cards. Cardholders who pay their full statement balance each month pay no interest regardless of the card's APR.
Example
A cardholder with a $3,000 balance on a card with a 24% APR who makes only the minimum payment each month would pay approximately $720 in interest over the first year and take over 10 years to pay off the balance. Paying the full balance each billing cycle eliminates all interest charges entirely.
Source: Consumer Financial Protection Bureau — Credit Card Interest