How Credit Card APR Really Works
APR, grace periods, and how interest is actually charged on a balance.
APR (annual percentage rate) is the yearly cost of borrowing on a card, but interest is usually calculated daily. Card issuers divide the APR by 365 to get a daily periodic rate, then apply it to your average daily balance.
If you pay your statement balance in full by the due date, most cards grant a grace period and charge no interest on purchases. Carry a balance, and the grace period typically disappears until you pay in full again.
Why your rate is a range
Most cards advertise a range (for example, a lower and higher APR). The rate you actually receive depends on your creditworthiness and prevailing benchmark rates, which move over time. Treat any single number as illustrative until you see your own offer.
Cutting interest costs
The most reliable way to pay zero interest is to pay the full statement balance every month. If you carry a balance, a lower-APR card or a 0% intro-APR offer can reduce the cost while you pay it down.