APR vs Interest Rate on a Credit Card
They are the same on a credit card
On loans, APR can differ from the interest rate because it folds in fees, but on a credit card the APR is the interest rate, just stated as an annual percentage. So a 22 percent APR means a 22 percent annual interest rate on balances you carry. There is no hidden second number for purchases.
How the daily rate works
Interest is not charged once a year; the issuer divides your APR by 365 to get a daily periodic rate and applies it to your balance each day you carry one, which is why interest compounds. A 22 percent APR is about a 0.06 percent daily rate. This is covered in how credit card interest works.
Multiple APRs on one card
A card usually has several APRs: one for purchases, a higher one for cash advances, one for balance transfers, and a penalty APR after a missed payment. A 0 percent intro APR is a temporary promotional rate. None of it matters if you pay in full, since the grace period means no interest on purchases.
Frequently asked questions
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