"Understanding APR: How Interest Rates Affect Your Wallet"

What Is APR?
APR stands for Annual Percentage Rate. It represents the yearly cost of borrowing money on your credit card. It includes the interest rate and sometimes additional fees, giving you a fuller picture of what you’ll pay if you carry a balance.

How APR Works
If you don’t pay off your credit card balance in full each month, interest will be charged based on your APR. This interest is usually calculated daily. For example, with a 20% APR on a $1,000 balance, you would accrue about 55 cents in interest per day.

Types of APR
Credit cards often come with several types of APRs:

Purchase APR: The interest rate applied to everyday purchases.

Balance Transfer APR: Applies when you move debt from one card to another.

Cash Advance APR: Higher rate applied to cash withdrawals.

Promotional APR: A temporary low or 0% rate offered for a set period.

Penalty APR: A higher rate triggered by missed or late payments.

Why APR Matters
A higher APR means you’ll pay more in interest if you carry a balance. For example, if you owe $1,200 at a 20% APR and only make minimum payments, it could take years to pay it off, with hundreds of dollars going toward interest alone.

How to Manage APR
Pay your balance in full each month to avoid interest.

Know the APR types attached to your card.

Look for lower APR offers, especially for balance transfers.

Monitor for changes in your APR, especially after promotional periods or missed payments.

APR in India
In India, credit card interest is usually quoted monthly, often between 2.5% and 3.5%, which translates to 30% to 42% annually. Understanding this is crucial for managing credit card debt effectively.