What is a purchase APR on a credit card?

If you're new to the world of credit, you might be confused by several frequently used abbreviations. One of the most important ones is the annual percentage rate (APR). In short, APR is the amount you are charged by a lender or credit card issuer for borrowing money on an annual basis.

Regarding installment loans such as personal or auto loans, the APR encompasses both the interest and fees imposed by the lender. However, for credit cards, the APR solely refers to the interest rate and does not include any annual fees that may be applicable.

Keep reading to learn more about purchase APR and what it means for your bottom line.

Related: Does APR matter if you pay your balance on time?

How purchase APRs work

The purchase APR of a credit card is the interest rate that applies to purchases when no other APR takes priority.

There are a few other types of APR you might come across. Your card might have an introductory APR, which is a limited-time promotional interest rate. Or, it might have a cash advance APR — the rate for borrowing cash. However, purchase APR will be the focus here.

Suppose you anticipate carrying a balance on your credit card. In that case, the purchase APR is a crucial factor to consider, as it can significantly impact the amount of interest you will accumulate over time.

If you don't pay off your card regularly and allow APR to kick in, that interest can stack and hurt your wallet. Being mindful of the purchase APR on your card is essential for making informed decisions about managing your credit card balance and minimizing interest costs.

Related: How to use a 0% APR credit card as an interest-free loan

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What is a good APR?

Determining whether a credit card's APR is good or not is a subjective matter. According to Investopedia, the average credit card APR exceeded 24% in January 2025. Therefore, finding an APR below the average could be considered favorable.

There are many current credit card options with low APRs. This resource is an excellent starting point for your research and can help you identify credit cards with competitive APRs.

Related: Pros and cons of zero percent APR credit cards

How purchase APRs can change

Purchase APR can either be fixed, meaning it remains constant over time, or variable, meaning it can change periodically based on the prime rate (which banks use to determine interest rates in general).

Understanding whether your purchase APR is fixed or variable is essential in comprehending how your card's interest charges may fluctuate over time.

Also, be aware that failing to make your monthly minimum payment for 60 days or more can result in the loss of a lower purchase APR.

In such cases, your credit card issuer may impose a penalty APR, leading to higher interest charges. To prevent this situation, it is essential to consistently make your minimum credit card payment on time.

Related: Penalty APR: What it is and how to avoid it

Is APR the same as the interest rate?

Remember that the regular purchase APR comes into effect when there are no other interest rates in place. For instance, if your credit card has an introductory interest rate, the regular purchase APR will be applicable once the introductory period concludes.

To find out your current purchase APR, you can review your credit card statement or access your account through your lender's online platform. This will provide you with the necessary information regarding the interest rate that applies to your purchases.

Related: What is the prime interest rate for credit cards?

Bottom line

If you expect to carry a balance on your credit card, your purchase APR should be a top consideration, as it significantly affects the amount of interest you will accumulate over time.

To ensure that your purchase APR is as low as possible, find a card that makes sense for your wallet. Also, try to follow TPG's 10 commandments of credit card rewards to maximize your earnings in the future.

Related: What happens when zero APR ends on a credit card?