APR vs Interest Rate on Credit Cards

APR annualizes borrowing cost, but card interest is commonly calculated from a daily periodic rate. Fees and grace periods still matter.

The short version

For credit cards, APR expresses the interest rate as a yearly rate. It helps compare products, but it does not mean interest is charged only once a year.

Daily calculation

Issuers commonly convert APR to a daily periodic rate and apply it to a balance method described in the agreement. Read the statement and card terms for the exact calculation.

Grace periods

Many purchase balances avoid interest when the statement balance is paid in full by the due date, but grace periods are not required and cash advances usually work differently.

Compare the whole card

Check purchase, transfer, cash-advance, and penalty APRs plus annual, transfer, and late fees. A low headline rate can hide expensive terms.