Each type of rate / APR can change over time. Sometimes an APR will change from an Introductory APR to the Regular APR. Other times, if you miss the payment deadline, your Introductory APR could switch to the Default APR. All of these terms are defined more specifically below.
- Introductory Rate / APR
Also referred to as a “teaser rate,” an Introductory APR is the low (or zero!) rate charged by some credit card companies to lure new customers.- For some cards the Introductory APR applies only to purchases, for others only to balance transfers, and for some to both purchases and balance transfers. The Introductory APR in most cases does not apply to your Cash APR.
- The Intro APR lasts only through the Introductory APR period; when that time period ends, the APR increases to its Regular APR. Be certain to check the fine print for the difference between a credit card’s introductory and Regular APRs. A card with a low Introductory APR might not be the best card for you if the Regular APR is too high.
- Also note that if you are late paying your monthly bill, the credit card company might revoke your Introductory APR ahead of schedule and move you to the Default APR, which is usually above 20 percent!
- Intro APR Period
The Introductory APR period is the amount of time that you can take advantage of the Introductory APR; when the Introductory APR period ends, the APR increases to its regular rate.
- Regular APR
The Regular APR is the APR you are assessed for purchases, transfers, or cash advances after the introductory APR period is over. If you do not pay your monthly bill on time, the Regular APR can switch to a Default APR, which is generally much higher than what you were originally paying.
- Default/Penalty APR
The Default/Penalty APR is a higher APR that your other APRs will increase to should you fail to adhere to the terms outlined in your credit card agreement. The only Penalty APR trigger that can affect an existing balance (i.e. things you have already bought) is failing to make a minimum payment for a full 60 days past your payment due date. All other triggers, such as failing to make one minimum monthly payment or exceeding your credit limit, can only affect future transactions. Additionally, the credit card company may not increase your rates in the first 12 months of your agreement unless you are a full 60 days delinquent. The exact terms that will trigger the Penalty APR vary; for more information, check your terms & conditions sheet for your particular credit card. Most Penalty APRs are above 20 perent, which makes it even more important that you take the necessary steps to avoid triggering it.
On rare occasions, you will come across credit cards with Tiered APRs. These cards offer different rates for different balance levels. For example, you’ll pay a 16 percent APR on balances from $1-1,000, and a 15 percent APR on balances above $1000. The intent of these APRs is to encourage (or discourage) high amounts of debt.
