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 an APR of 15% 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.
What is the 15 percent on a credit card? ›
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.
What is APR for dummies? ›
APR is the price you pay for a loan. It typically includes interest rates and fees. APR can sometimes be the same as a loan's interest rate, like in the case of most credit cards. APR may be fixed or variable, meaning the rate may stay the same or it might change with market factors.
Do you pay APR if you pay in full? ›
The bottom line on APR
Remember that APR is only applied if you're carrying an outstanding balance on your card. You can typically avoid paying any interest charges if you pay off your card balance before the statement period ends each month. Selecting the right credit card shouldn't be complicated.
How to figure out APR on credit card? ›
Calculating your monthly APR rate can be done in three steps:
- Find your current APR and balance in your credit card statement.
- Divide your current APR by 12 (for the twelve months of the year) to find your monthly periodic rate.
- Multiply that number with the amount of your current balance.
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 rowsKey Takeaways
Your interest rate may have nothing to do with your credit score. Rewards credit cards typically charge a higher APR than cards without rewards. When you pay your entire statement balance by the due date, you won't be charged interest on purchases.
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)
What is 15% of your credit score? ›
FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
In reality, the best credit utilization ratio is 0% (meaning you pay your monthly revolving balances off). But keeping your utilization in the 1% to 10% range should help improve your credit score, as long as the other aspects of your score are within reason.
What credit card has a $5000 limit with bad credit? ›
The U.S. Bank Altitude Go Visa Secured Card is the best option if you have limited/poor credit and are looking for a high credit limit. You can deposit anywhere from $300 to $5,000, making your maximum credit limit available $5,000.
What is a good APR example? ›
- What defines a good APR for a credit card is relative. ...
- 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. ...
- The best possible APR on a credit card is 0%, which you can get for an introductory period on many cards.
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 APR a big deal? ›
Key Takeaways
The annual percentage rate (APR) is almost always higher than the interest rate, as it includes other costs associated with borrowing the money. The federal Truth in Lending Act requires that every consumer loan agreement list the APR along with the nominal interest rate.
What's a good APR for a credit card? ›
A good credit card APR is a rate that's at or below the national average, which currently sits above 20 percent. While there are credit cards with APRs below 10 percent, they are most often found at credit unions or small local banks. If you don't have good credit, you're likely to receive a higher credit card APR.
How do I get my APR lowered? ›
Here are some tips on how you can lower your credit card APR:
- Improve your credit score. An improvement in your credit score is critical if you want to start reducing the APR you're being offered by lenders on credit card applications. ...
- Consider a balance transfer. ...
- Pay off your balance. ...
- Learn your credit issuer's policy.
Paying the minimum on time can help you avoid penalties and fees. But keep in mind that you'll still be charged interest when you carry a balance. Paying your full balance each month could help you avoid paying interest altogether.
