What does APR mean for credit cards?

Credit Card
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apr in credit card transaction

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APR is Annual Percentage Rate, i.e., annual cost of borrowing on a credit card in percentage. APR includes both the interest rate and any standard fees applied to outstanding balances.

There are different types of APR:

  • Purchase APR: for regular transactions
  • Cash Advance APR: for higher transactions and for cash withdrawals
  • Penalty APR: applied for late payments or defaults

APR is a key metric for comparing credit cards, as a higher APR increases the cost of carrying a balance. In India, credit card APRs are often high, sometimes exceeding 36% annually on unpaid dues. Paying your balance in full each month avoids interest charges entirely.