CHASE - CREDITCARDS

Understanding Annual Percentage Rates (APRs)

Annual percentage rate or APR is a term used in credit card offers and disclosure information. Here is a brief overview to help you understand how APR applies to your credit card.

What is the APR?

The annual percentage rate or APR on your credit card is the interest rate used to calculate your finance charges on the amount you owe. Your monthly credit card statement lists the APR each month.

What are the different types of APRs?

Different APRs may apply to different types of balances, such as purchases, cash advances, and balance transfers. Each type of balance usually includes fees related to the transactions as well. You may also receive a low introductory interest rate.

• Purchases—Purchase balances consist of retail transactions as well as account fees (such as late fees).

• Cash advances—Many credit cards permit you to use an ATM, convenience check or bank to get cash. Usually, interest accrues on cash advances from the date of the advance. Cash advances may incur a transaction fee and a higher APR than purchases.

• Balance transfers—Your credit card may allow you to transfer a balance from another creditor. The card may have a promotional APR on the transferred balance for a limited time. A transfer transaction fee may also apply. Be sure you understand all the terms of the balance transfer offer before accepting it.

• Introductory—A credit card may provide a low interest rate for a limited number of months after you accept the card. After the introductory period, a higher APR applies. There may be some conditions for maintaining the introductory APR, such as making a minimum number of purchases each month.

What can cause the APR to change?

The APR can change over time for various reasons. Your behavior may trigger a change in the APR. Alternatively, market conditions can precipitate the change.

• Automatic APR changes based on your behavior—Some credit cards may increase your APR if your payment is late, if you go over your credit limit, or if your check for your payment is returned for insufficient funds in your account. The higher rate will appear on your billing statement.

• Changes in APR with advance notice—You may receive a notice in your billing statement about a planned change for the next month. APR and terms may change due to market conditions, changes in your credit history, or other reasons. Usually, you will have the chance to reject the change by paying off your balance. You may also have to close your account.

• Variable rate APR changes—If your credit card has a variable APR, the rate may change due to market conditions. Often, the APR is tied to an interest rate index, such as the prime rate. To calculate the rate, the issuer adds a predetermined margin to the index (for example, the  prime  rate plus 8 percentage points). The card issuer makes these changes periodically and they will appear on your billing statement.

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