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Penalty APR is a type of credit card interest, and the name imposes penalties as indicated.

His APR (Annual Rate) on credit cards is probably best known as the interest on purchases and other transactions. A Penalty APR is a higher than normal rate for violating a card's terms and conditions. It's costly, hurts credit, and usually takes months to resolve. Fortunately, there are ways around it.

Here's what you need to know about Penalty APR, how it affects your credits, and what you can do to avoid it.

How penalty APR works

Penalty APRs are triggered when a payment is late, when a payment is returned due to insufficient funds or a closed account, or when the credit limit is exceeded.Each credit card issuer has a penalty APR There are certain conditions that must be met in order to apply. When Penalty APR is triggered, it replaces the standard APR rate with Penalty APR. This is probably much higher.

Credit card issuers cannot arbitrarily charge penalty APRs. It's important to remember the numbers 21, 45, and 60 in your credit card APR.

  • 21.There is a 21-day grace period from the end of the billing cycle until the card's standard APR is applied to the outstanding balance.
  • 45. Federal law requires an issuer to give him 45 days' notice to apply her APR penalty.
  • 60.The APR penalty usually applies if the outstanding balance has not been paid in full for more than his 60 days.

Read your credit card's terms and conditions to see when it applies. What are penalty APRs and higher rates? Do the same before applying for a new card.

Lightbulb Bankrate Insight Don't confuse “0% introduction APR” with “no penalty APR”. Instead of avoiding late payment penalties, the best interest-free credit cards allow you to temporarily avoid standard APRs on purchases and balance transfers.

How long does the penalty APR last?

If you're serious about paying off your balance, it can take as little as six months. Federal law requires a credit card issuer to verify an account when he makes six consecutive on-time payments. The easiest way to revert to standard her APR is to address the underlying reason behind the penalty APR.

Determines whether paying off a minimum balance, staying on track with payments, and staying within your credit card limit is standard APR. will resume.

Will triggering a penalty APR affect my credit?

Yes, a penalty APR can negatively impact your credit score. In the FICO scoring model, repeated payment delays impact categories of payment history. Payments that have been refunded due to closed accounts or insufficient funds can also affect your payment history. In addition, exceeding the credit limit results in high credit utilization, accounting for 30% of the FICO score.

Your payment history, including your credit card account, accounts for 35% of your score. A record of late payments can weaken that pillar.

How is the penalty APR calculated?

Penalty APR is usually a predetermined rate stated in the card's terms and conditions. Penalty APRs are generally not determined by factors such as credit card balance or credit score.

Most credit card issuers limit the penalty APR, but usually the limit is a whopping 29.99%. This rate is almost double his APR for the average credit card, about 17%, and almost certainly much higher than the normal APR.

Please note that avoiding penalty rates will slow down your payment, which may cost you in other ways. At the end of the 21-day grace period, interest will be paid on the outstanding balance in the form of the card's standard APR. You may also have to pay late fees.

What to do when APR is penalized

If you are currently being charged APR fines, here are some steps you can take to alleviate your debt.

  • Call the issuer. Take the initiative and explain the backstory of the unpaid. This does not guarantee that the penalty APR will be reduced, but there is no harm in presenting your side.
  • Check your credit card agreement. Clarify how your credit card handles late payments and how his APR penalties apply to balances.
  • Please refrain from using this credit card and pay the balance as soon as possible. If you can't get rid of the penalty APRs, you want your balance to be as low as possible.
  • Stay organized. To break the cycle of late payments, you should check your balance frequently and set reminders for due dates.
  • If you are unable to pay off your balance, consider transferring and applying for a balance transfer credit card. Find a credit card that will accept a transfer of your balance by imposing a penalty in April to reduce your debt burden.

How to avoid APR penalty

Good financial habits can prevent lapses in payment routines, as outlined in the next tip.

  1. Don't carry balanceThe best way to avoid APR penalties is simple. Pay your monthly credit card bills in full and on time. Minimizing your monthly payments may temporarily avoid APR penalties, but you may just be buying time if you don't pay all your balances back in a timely manner.
  2. Automatic payments.Many credit card issuers offer automatic payment options, so you can set a date and pay on autopilot . Payments are tied to your bank account and you can choose to pay full or minimum amount (full payment is recommended).
  3. Set a reminder. Set a reminder for yourself if you don't want to use automatic payments. You can do it on your phone or computer, or you can take the old-fashioned approach of circling the date on a calendar or sticking a sticky note to your monitor.
  4. Choose a card with no APR penalty
  5. strong>As a safety net, you can also consider credit cards that do not charge penalty APRs. Here are our favorites. Some of his no-penalty APR cards are on par with other options, but potential trade-offs could include lower credit limits and reduced reward programs.

No Credit Cards

Not all credit cards have an annualized penalty. Here are some of our favorite penalty APR free cards.

BankAmericard credit cards

BankAmericard® credit card offers generous 21 billing cycles to transfer balances within the first 60 days 0% introduction APR period means you have existing credit card debt and are looking to transfer to a new card It is especially useful when This takes more than a year and a half to catch up with payments without accruing interest.After that, the APR fluctuates from 15.74% to 25.74%.

BankAmericard® credit card information was updated on December 1, 2022.

Citi Simplicity Card

The Citi Simplicity® Card is another great card for those looking to transfer funds. Introductory balance transfer done within the first 4 months We have a great offer for 21 months with 0% APR. The ongoing APR range is higher than the BankAmericard range, variable from 18.24% to 28.99%.

Discover Cash Back

If you're looking for a cash back card with no APR penalties, Discover it® Cash Back is for you. With this card, you'll get 5% Cash Back on purchases up to $1,500 quarterly in rotating categories after activation, and 1% Cash Back thereafter. There is also no first late fee (up to $41 thereafter).

Petal® 2 “Cash Back, No Fees” Visa Credit Card

This card is beginner-friendly. for some reason. The Petal® 2 “Cashback, No Fees” Visa® Credit Card, in addition to no APR penalties, is one of the most accessible rewards credit cards for credit novices. With no credit requirements, even those with no credit history can earn 1% cash back instantly.


Penalty APR is inevitable. If possible, make your credit card payments on time each month to avoid penalty APRs as well as late fees and damage to your credit score. If you're worried about the possibility of penalizing APRs, consider a card that doesn't impose a penalty rate. You will still be responsible for fees and interest, but your APR will not increase as a result of your account activity.