Paying interest on the money you borrow is how a lender can afford to loan you funds. A creditor, like a credit card company, will put this interest into a yearly rate called the annual percentage rate (APR). Your credit card issuer must disclose your APR before they can activate your account, and it should also appear on your account statements.
APRs are the interest rates your credit card issuer may charge for different types of transactions. You may have a different rate depending on your transaction:
- Standard purchase APR (for your everyday purchases)
- Introductory APR (a special offer when opening your account)
- Balance transfer APR (When you transfer debt from one card to another)
- Cash advance APR (When you use your card at an ATM to get cash)
- Penalty APR (if you don’t make the minimum payments on time)