An annual percentage rate (APR) of 15% indicates that if you carry a balance on a credit card for a full year, the balance will increase by approximately 15% due to accrued interest. For instance, if you maintain a $1,000 balance throughout the year, the interest accrued would amount to around $150.00.
Fortunately, you won’t be charged the 15% APR if you pay off the full balance by the due date every month. If you carry a balance from month to month, however, you’ll end up paying a good bit in interest. That’s because each day the balance goes unpaid, interest charges are compounded. In other words, interest is added to both your principal balance and any previous days’ accumulated interest.
Given that some months have more days than others, the credit card issuer will break down the APR using a daily periodic rate (DPR) to determine how much interest you’ll pay for a given billing period. To get the DPR for a credit card with a 15% APR, simply divide 15% by 365. The result is a rate of 0.0411% per day. Daily interest charges apply until the outstanding balance is paid in full.
This answer was first published on 09/13/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
That daily interest charge is added to your balance the next day. For example, let's say you have a credit card with an APR of 15%. Your daily rate would be 0.041% (15% divided by 365). If the balance on your card today is $200, today's daily interest charge would be $0.08 ($200 multiplied by 0.041%).
Is a 15% APR good? ›
A 15% APR is good for credit cards and personal loans, as it's cheaper than average. On the other hand, a 15% APR is not good for mortgages, student loans, or auto loans, as it's far higher than what most borrowers should expect to pay. A 15% APR is good for a credit card. The average APR on a credit card is 22.89%.
What is the APR on a credit card for dummies? ›
The annual percentage rate (APR) is the cost of borrowing on a credit card. It refers to the yearly interest rate you'll pay if you carry a balance, plus any fees associated with the card. APR often varies by card. For example, you may have one card with an APR of 9.99% and another with an APR of 14.99%.
Is 15% good for a personal loan? ›
A good personal loan interest rate depends on your credit score: 740 and above: Below 8% (look for loans for excellent credit) 670 to 739: Around 14% (look for loans for good credit) 580 to 669: Around 18% (look for loans for fair credit)
Do you only pay APR if you miss a payment? ›
If you carry a credit card balance, your card's APR is critical. When you don't pay off your statement balance in full, your lender charges you interest on any remaining balance. And credit card interest compounds daily — which means interest accrues each day, effectively charging you interest on your interest.
Does APR matter if I pay on time? ›
Does APR matter if you pay on time? The short answer to this is no. Credit cards offer a grace period that allows you to make purchases with your card without incurring interest charges at the purchase APR rate, providing you pay off your balance in full by the payment due date each month.
Why is my APR so high with good credit? ›
Factors that increase your APR may include federal rate increases or a drop in your credit score. By identifying changes to your APR and understanding the actions that led to your increased rate, you can take steps that may help reduce your interest charges in the future.
What's a high APR for a credit card? ›
No, a 26.99% APR is a high interest rate. Credit card interest rates are often based on your creditworthiness. If you're paying 26.99%, you should work on improving your credit score to qualify for a lower interest rate.
How bad is 14% APR? ›
Anyone with a credit score between 300 and 500—or deep subprime—is considered to have bad credit. The average APR for a deep subprime borrower is 14.08%, according to Experian. Any rate below 14.08% for a borrower with bad credit is ideal.
What is a normal APR on a credit card? ›
The average annual percentage rate (APR) for credit cards where the user has a balance is 22.63% as of February 2024, according to the most recent numbers from the Federal Reserve. But the average credit card APR isn't necessarily the rate you'll get when you open a card.
What's the average interest rate on new credit card offers?
| Category | Minimum APR | Average |
|---|
| Average APR for all new card offers | 21.29% | 24.71% |
| 0% balance transfer cards | 18.80% | 23.42% |
| No-annual-fee cards | 20.67% | 24.15% |
| Rewards cards | 21.00% | 24.61% |
10 more rowsThe APR on a credit card is an annualized percentage rate that is applied monthly. If the advertised APR on a credit card is 19%, for example, then an interest rate of 1.58% will be imposed on the outstanding balance each month. As mentioned, any given credit card may come with several different APRs attached.
What credit score do you need for a $20000 personal loan? ›
Requirements for a $20,000 Personal Loan
Requirements vary by lender, but most lenders require borrowers to have a credit score in the good to excellent range — meaning a score of at least 670.
How much would a $20,000 loan cost per month? ›
The monthly payment on a $20,000 loan ranges from $273 to $2,009, depending on the APR and how long the loan lasts. For example, if you take out a $20,000 loan for one year with an APR of 36%, your monthly payment will be $2,009.
How hard is it to get a $20,000 loan? ›
As far as qualifying, you'll often need good or better credit (a FICO score above 670), and a stable income source that shows you can afford the payments. Annual percentage rates (APRs) for personal loans typically range from around 6% to 36%, depending on your credit profile and other factors.
Is APR charged monthly? ›
The APR on a credit card is an annualized percentage rate that is applied monthly. If the advertised APR on a credit card is 19%, for example, then an interest rate of 1.58% will be imposed on the outstanding balance each month. As mentioned, any given credit card may come with several different APRs attached.
Is 7% APR good for a credit card? ›
A credit card APR below 10% is definitely good, but you may have to go to a local bank or credit union to find it.
Is 29.99 APR high for a credit card? ›
Penalty APRs are part of why credit card overspending can be so dangerous, as they may reach higher than 29.99% when a payment is at least 60 days late. Interest rates this high would be unthinkable in most other common lending contexts.
What's a good credit card APR? ›
An APR is considered to be a good rate when it is at or below the national average, which currently sits at 20.40%, according to the Fed. This means that a credit card offering a fixed rate lower than 20.40% or a variable rate with a maximum of 20.40% would be considered a good APR for the average borrower.
