What is APR Credit Card?

By Joseph
February 8, 2022

Are you new to the world of credit? Being introduced to the limitless world of credit can be overwhelming, especially when considering the myriad of technical terms that you need to understand to continue being a part of this novel realm. One of the most important credit-related terms is ‘APR credit card’. To help you understand the terminology and what it entails, we dive deep into what an APR exactly is. We also expand on the topic and help you demystify the meaning of APR credit cards.

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What is APR?

The full form of APR is ‘annual percentage return’, but it is mostly termed as ‘interest rate’. It refers to the additional charge that you pay every month on your outstanding credit card bill amount. This charge only applies to you if you do not pay your credit card bill amount on time. If you pay your bill during the credit card grace period, this charge does not apply to you. 

This term is used heavily in the credit card context because it applies to several credit card payment situations. Different interest rates are charged depending on how you use your credit. For example, the interest rate that is applied on a cash advance that you withdraw is mostly different from the interest you are expected to pay if you miss making your credit card bill payment. To put things into perspective, the Bajaj Finserv RBL Bank SuperCard lets you avail of a personal loan for emergencies for 90 days with a nominal interest rate of 1.16% per month. This, however, differs from zero interest you would have to pay for up to 50 days when you withdraw money from an ATM using this card. In the latter case, only a processing fee of 2.5% applies to you. 

Additionally, these interest rates vary significantly depending on which credit card issuer you approach and also depending on the different reward structures that are associated with different credit cards. 

Types of APR

Fixed APR:

Most consumers assume that interest rates are variable in nature; that is, they change over some time. However, fixed interest rates also exist. As the name suggests, these APR rates do not change over some time. In case it does change, the credit card issuer needs to send a notice to the credit cardholder in advance so that they are well aware of these changes. In most cases, this notice must be sent 45 days before the change is made to the interest rate. 

Variable APR:

Variable interest rates are the most common type of interest rates that come with credit cards. These interest rates are subject to change, and no specific notice has to be sent by the credit card issuer to variable interest credit cardholders to notify them every time the interest rate changes. These changes are made based on a change in the index rate. The index rate is determined by the credit card issuer’s policies. The changes in the interest rates take place after a certain interval of time — monthly or quarterly. It is computed as the sum of a certain percentage change plus the prime (index or base) rate.

APR Versus Interest Rates

APR and interest rates are considered to be synonyms in most books and are also used interchangeably by credit cardholders. There is, however, a minute difference between these terms. This difference only arises when you apply and get approved for a loan. An interest rate refers to an additional rate that a credit lender provides to you for borrowing money. APR refers to this additional rate that you pay a lender for borrowing money from them, in addition to other fees and rates that may apply for the procurement of this loan. To be more specific, an APR provides you with a more accurate estimate of all the rates that you have to pay besides your standard loan amount payment. 

Relationship Between Credit Scores and APR

There is a correlation between your credit score and the determination of the APR you are charged with. A bad credit score massively impacts your APR. Lenders review your credit history, including the number of other credit cards available under your name, any history with credit default, and the payment of any current loans under your name before telling you the interest rate that aids a credit card. This is done to provide relief to the credit lender in case you forget to pay your monthly credit card bills on time. 


Credit cards come with interest rates or APRs that are required to be paid for different reasons. The most common reason for this interest rate to be paid is in a situation where you do not pay your monthly credit card bill on time. We have discussed the basics of everything credit card interest rate-related to help you understand these terms before you invest in a new credit card. Different credit cards provide cardholders with different interest rates, and it is important to be aware of these various rates before deciding on which credit card to apply for.

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