When purchasing items using a credit card, customers are subject to an Purchase Annual Percentage Rate (APR). The APR is essentially the interest rate the cardholder is charged each month, amassing to a percentage rate of the actual price over the course of the year due to certain regulations.

Looking at a credit card statement, one will see the purchase APR shown in percentage form in the summary of charges. This figure is how much it will cost the cardholder each month to maintain the amount of credit running against their card. If a customer pays the account in full each month, the interest is always kept to a minimum; however, if a customer regularly carries a balance, then the interest rate becomes more important.

The Purchase Annual Percentage Rate (APR) of a credit card is typically broken down into the following categories: purchase APR, promotional rate, cash advance interest rate, balance transfer rate, and late and over limit fees. The purchase APR is the most straightforward charge and will vary with each card. Depending on the as well as the customer’s credit score, the purchase APR can be fixed or tiered. In any case, this rate will be the same for purchases made throughout the year, until the credit issuer alters it.

It is important for customers to learn and understand the Purchase Annual Percentage Rate for their credit cards as it can be one of the most expensive fees for those who are not able to pay the balance in full each month. By understanding the APR and adjusting their spending habits accordingly, customers can save a great deal of money in terms of interest payments. In addition, customers should also keep an eye out for any changes to the rate made by the credit card issuer, as they need to be notified 45 days in advance according to the Credit CARD Act of 2009.