What is Purchase APR?- Simply Explained In 2024

Purchase APR is the specific annual percentage rate or interest rate applied only to your credit card purchases if you carry a balance on your credit card.

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Applying for a credit card? 

Then a clear understanding of Purchase APR is crucial for you. Because most of us use credit cards for making purchases. But what is purchase APR? 

That’s what you are going to find out in this post. Moreover, I’ll also talk about different types of APR, how purchase APR works and how you can avoid paying APR, and many more related topics. So, stick here till the end.  
Let’s start by understanding credit card APR.

Find out What is a credit grantor?

What Is APR On Credit Cards?

Credit card APR is the abbreviation of Annual Percentage Rate. It refers to the annual interest rate you must pay if you carry a balance. 

Credit cards are a financial tool that lets you borrow money. But the money you borrow using a credit card is not free. Your credit grantor charges interest on it if you don’t clear your bill on time or for balance transfers and cash advances.

However, a credit card’s interest rate is calculated on a yearly basis and this interest is known as the Annual Percentage Rate or credit card APR. 

Types of Annual Percentage Rate

There are various types of credit card Annual percentage rates. Each is named after its specific purpose. Here are the most common 5 types of credit card APR

  1. Purchase APR
  2. Cash Advance APR
  3. Balance Transfer APR
  4. Penalty APR
  5. Promotional or Introductory APR

So, what is purchase apr on a credit card?

let’s have a look at the purchase apr meaning in detail.   

What is Purchase APR?

what is a purchase apr

Purchase APR is one specific type of credit card interest rate. It only gets applied to your credit card purchases if you missed a credit card payment or carrying a previous balance.  

Like other loans, the money you spend using your credit card also comes with an interest. Generally, credit card APR or interest is much higher than other loans. Moreover, there are different types of credit card interest for different purposes. 

One such interest is Purchase APR. So, when does purchase APR apply?

It only gets applied to your new purchases if you

  • Do not have a grace period.
  • Miss your monthly credit card payment and
  • Carry a previous balance.  

However, cash Advance APR and balance Transfer APR kick in immediately.

Purchase APR Example

Here is a quick example that will help you understand better

Suppose, you have got yourself a credit card with a 15% purchase APR. Now, you have purchased something worth $1,000 using the credit card. But you have not pay off any of the $1,000 balance on your card for the month.

On 15% purchase APR the total interest will be $150 and the interest charge for a month will be $12.5. So, your new balance will be $1,012.5. The interest will keep adding unless you pay the bill in full.

Now we know the purchase apr meaning, let’s have a look at the types of purchase apr.

Types of Purchase APR

Generally, there are 2 types of purchase APR. They are 

  1. Variable purchase APR
  2. Fixed purchase APR

So, what is variable purchase apr and fixed purchase apr?

What Is Variable Purchase APR?

Variable purchase APR is a type of credit card purchase interest rate that can change over a period of time. 

Credit card companies offer either variable APR or fixed APR. Variable purchase apr changes with time. But most of the time it’s lower than the fixed purchase APR. In case the interest rates go up then variable apr on purchases will also increase.

However, most credit card purchase APR is variable APR, meaning it can change depending on the interest rate and decision of your credit card issuer. 

But if you have a variable interest credit card then your credit card issuer must inform you 45 days earlier before changing the APR. 

What Is Fixed Purchase APR?

Fixed purchase APR is the type of credit card purchase APR where the interest rate is fixed. Meaning your credit card company can’t change it over the course of time. 

Fixed purchase APR is quite rare in credit cards. To be frank, in the case of credit cards, there is no fixed APR. Because both of them change depending on the credit card company’s decision. 

However, a fixed APR is more stable than a variable APR. Because they rarely change unless the interest rates go up.  

So, before getting a credit card, find out about the credit card’s APR by looking into its terms and conditions.  So, what does current purchase apr mean?

What is Current Purchase APR?

Current purchase APR indicates your current purchase APR charged by your credit card company. As most purchase APR are fixed purchase APR. So, your purchase APR changes with time.

As a result, when your credit card company sends you a statement they add what is the current purchase apr for new purchases made with your card. So, that is the current purchase apr meaning.

When is Purchase APR Applied

When will the purchase APR applied, depends on a few factors. Generally, it falls into the below three categories:

  • Standard purchases: APR applies immediately if you don’t pay the bill on time.
  • Introductory periods: Lower APR applies until the period ends, then regular APR takes over.
  • Promotional purchases: Specific APR applies for the promotional period, then regular APR resumes.

Purchase APR vs Cash Advance APR

here is a comparison between Purchase APR vs Cash Advance APR

Purchase APRCash advance APR
Purchase APR is the interest rate charged on purchases made with a credit card in case, you don’t pay off the full balance by the due dateCash advance APR, on the other hand, is the interest rate charged on cash withdrawals made with your credit card. 
Applied only on purchases Applied on ATM, Bank withdrawals.
Low APR and no extra fees in most cases. High APR and more fees associated with it. 

By now we have found out what does purchase apr mean, credit card purchase apr, current purchase apr, variable purchase apr meaning, and purchase apr vs cash advance apr. At this moment, your convenience, here is a purchase APR calculator. 

Purchase APR Calculator

This simple calculator can help you find how much purchase APR you need to pay depending on your credit card balance and interest rates. 

First, find your Current purchase APR by looking into the Interest Charge Calculation section of your credit card statement. Then put it into the box below. 

Now, let’s have a look at regular purchase apr meaning.

Also, Check What is a grace period

Regular Purchase APR Definition

Most credit card companies offer an introductory APR which is 0% purchase APR. They do it to attract new customers. When the introductory APR ends the usual purchase APR gets applied for purchases. This is known as Regular Purchase APR. 

There goes regular purchase apr definition. But how much is the regular purchase APR.

What is Regular Purchase APR?

Regular purchase APR can be between 10-15% or more. Normally, it’s 12% on most credit cards. But what is a good purchase APR?

What is a Good Purchase APR?

A good purchase apr indicates an APR that is low and suitable for consumers. 12% or less is considered to be a good purchase APR. So, what is a high purchase APR? 

What is a High Purchase APR? 

A high purchase APR can be up to 20-30%. Moreover,, if you avoid paying your credit card bills for 60 days or more then you will get a penalty APR. Penalty APR can be as high as 40%!

How to Avoid Purchase APR

Here are some ways to avoid paying purchase APR 

  • Always Pay your credit card bill on time. 
  • Properly utilize your grace period. 
  • If your credit card has an interest-saving balance or similar feature then pay the minimum balance to avoid purchase APR. 
  • Utilize Introductory purchase apr.
  • If you somehow miss a payment and carry a balance then avoid using your credit card until you pay interest and the bill. 
  • Never surpass our credit limit.
  • Always read your monthly credit card statement carefully and use your credit card responsibly. 

When Are You Charged Interest On A Credit Card?

Credit card interest is different from regular interest. Because it does not apply to all the money you a loan. Here are some scenarios when you will be charged interest on a credit card 

  • If you do not pay your credit card bill then you will be charged purchase APR on new purchases until you pay your bill with interest. 
  • In case you use your credit card for cash advances then you will be instantly charged interest. 
  • If you use your credit card for balance transfers then you will be charged interest. 
  • When you do not pay your bill for 60 days or more then a penalty will kick in. 

By now we have found out What is Purchase APR. Now, let’s look at some of the related queries.


Here are some of the frequently asked questions related to this topic.

What is Intro Purchase APR?

Intro purchase APR, or introductory purchase annual percentage rate, is a promotional interest rate offered by credit card companies to new users. This period can last from several months to a year. It’s a temporary discount on the regular purchase APR.

Think of it like a trial period for the card’s purchase APR. You get to enjoy a lower interest rate on your purchases, making it easier to pay off your balance and avoid interest charges altogether.

What is the Cash Advance APR Meaning?

Cash advance APR, which stands for Cash Advance Annual Percentage Rate. It refers to the interest rate charged on cash you withdraw using your credit card. It’s often significantly higher than the purchase APR. Moreover, it is applied immediately after you withdraw cash. So, even if you pay bill on time you will be paying interest for cash advances.

What is 24% APR on a Credit Card?

A 24% APR on a credit card means it has a 24% annual percentage rate which is higher than average. The average credit card APR is around +-22%. So, a 24% APR on a credit card is quite high.

In Summary 

Credit card purchase APR tells you how much monthly APR you have to pay when you miss a credit card payment. So, use it to your advantage and avoid paying purchase APR in the first place.  

Lastly, before getting any credit card please read the terms and conditions properly and find out your credit card’s APR. I hope this post on purchase apr explained was helpful.

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