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Featured Review of APR on Purchases

Credit Cards - an Introduction

The increasing use of credit cards now a day is becoming a growing concern for many individuals and is proving to be really profitable for the issuing financial institutions and banks. Credit cards, where on one hand, provide the ease of not carrying hard cash everywhere and make certain payments to be made really easy, do have some disadvantages too. One of these disadvantages includes APR on purchases.

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What is APR?

APR stands for Annual Percentage Rate. This is the rate that is charged by the financial institutions or banks which is calculated on annual and not on monthly basis. This type of rate is being charged in many financial and banking services like use of credit cards, mortgage loan, general loans, etc.

Hot Credit Card Offers
Hot Credit Card Offers
Type Brand Annual Fee APR Cashback Bonus Details/Apply
The First Progress Platinum Elite MasterCard(R) Secured Credit Card
$29 19.99% N/A


* This online application is subject to the terms and conditions as described in the Important Information Section of the application.

Types of APR
There are following two types of APR’s that are most widely and popularly being used today all over the globe by different institutions and banks.

  • The normal APR, is the simple interest rate calculated for the whole year rather than months.
  • The effective APR, that includes fee plus compound interest rate that is again calculated for the whole year.

APR on Purchases
This accounts for the rate that a purchaser has to bear on the balance of purchases he or she has made through credit cards. This actually applies on the bills that have not yet been paid in full and there is some balance to be carried forward in future for the bill of purchases that have been made using a credit card.

Application of APR on Purchases

Banks or other financial institutions that generally issue the credit cards do give some sort of a grace period to its card holders or customers so that payment can be easily made without any problem. That period usually accounts for 20-25 days. APR on purchases is only applied in case this mentioned grace period by the financial institution is over. If the customer or Account holder still fails to make the whole payment within specified days, the bank or card issuing authority owns the right to charge APR on purchases that is actually a representative of the chargeable rate to be received from customer not on monthly basis but annual basis.

The obligation of lenders

There is a certain obligation of lenders or credit card issuing authorities that whenever they issue the credit card to the card holder, they need to communicate the students about  some other APR rated that include cash advance, APR of balance transfer, the penalty APR and introductory APR.

Other names for APR for purchases

There are some other known ways of calling APR on purchases that includes Interest payable for the whole year. This whole year APR is calculated on the basis of the interest rates provided monthly. Either APR is calculated by taking average of the mentioned months falling under that year, or this can be calculated on compound basis that adds up the total fee to the remaining balance and the resulting amount is used to calculate the compound interest payable for the year.

Low APR Cards

These cards offer 0% APR on purchases that means that user of the card will not be charged for carrying forward the purchase balance for a certain period of time. Some large banks provide this Low APR cards period in months.

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