Credit cards can provide value and rewards, but being unaware of card rates and fees can hamper your ability to maximize what your card offers.

Frequently Asked Questions

  • Are credit card interest rates capped?

    Yes, credit cards have an interest rate cap, which is a number that reflects the highest your interest rate can go. This is an important figure to know since most credit cards have a “variable rate” that changes over time. You’ll find your interest rate cap in your credit card agreement.

  • When is credit card interest charged?

    In general, credit card issuers will charge you interest when you don’t pay off your balance by your bill’s due date. The interest you pay is based on your annual percentage rate (APR), which calculates what you owe based on the average daily interest accrued by your unpaid balance.

  • Why did my APR increase?

    Depending on the card you have, your rate can go up for multiple reasons. Three of the most common reasons are that your card’s variable rate increased, you have a penalty APR resulting from a late payment, or your introductory rate ended and your regular APR is in effect.

  • What happens when I make a late payment?

    The immediate consequence of a late payment is that your card issuer will likely charge you the late fee that’s listed in your credit card agreement. If you pay your bill more than 30 days late, your issuer may report your late payment to credit bureaus, a move that could lower your credit score. If you are more than 60 days late, your issuer could raise your APR.

  • How can I avoid interest payments?

     Yes. If you pay off your entire credit card balance every month, you won’t pay interest. You can ensure this happens each month by setting up your card’s autopay feature and selecting the option to pay off your statement balance. Make sure you’ve budgeted enough money such that you’ll have the funds to cover the payment.

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