What is APR on a credit card and how does it affect what I pay?

APR is the Annual Percentage Rate — the annualized cost of carrying a balance. Pay your statement in full every month and APR is irrelevant: you pay zero interest. Carry a balance and it sets your daily interest charge. The U.S. average sits around 21-22%.

Credit cards use daily-periodic-rate math, not annual math: the daily rate is your APR divided by 365, applied to your balance each day, then summed at the end of the cycle. At 20% APR, a $1,000 balance carried a full 30-day cycle costs roughly $16.44 that month. A single card can list several APRs — purchase, balance transfer, cash advance (usually highest, with no grace period), penalty, and any intro/promotional rate. Under the Truth in Lending Act, issuers must disclose the APR in the card's rate-and-fee table before you apply; the CFPB publishes thousands of real card agreements in its public database.

Reviewed by the ClearValue Editorial Team · Last updated 7/8/2026