APR is an annualized rate
A 24% purchase APR does not mean the issuer adds 24% once a year. Most cards use a daily periodic rate—approximately the APR divided by 365—and apply it to an average daily balance.
The grace period matters
When you pay the statement balance in full by the due date, many cards provide a grace period on new purchases. Carrying a balance can remove that protection, causing new purchases to begin accruing interest.
Promotional APRs have an end date
A 0% introductory APR can reduce financing costs, but minimum payments may not clear the balance before the promotion expires. Divide the balance by the promotional months to establish a practical payoff target.
- Confirm which transactions qualify.
- Include any balance-transfer fee.
- Check the post-promotional APR.
- Avoid missing a payment that could affect promotional terms.
Compare cost, not only rate
Two cards with similar APRs can produce different costs because of annual fees, transfer fees, penalty terms, and payment schedules. Estimate the total dollar cost using your likely balance and payoff period.