It's no secret that charge card account interest rates are the way credit card account issuers make money by loaning cash to consumers through these pieces of plastic. The higher the interest rte on the charge card, the more cash the bank makes. Which also means the higher the APR on a credit card, the higher the cost to Americans who use it. However, when people ask what your interest rate is on your credit card, they are asking a question that doesn't make any sense. This is because most Americans who carry balances on credit card accounts have balances spread out across multiple annual percentage rates on each card. Here is a list of each different APR consumers might see on their credit card and what balances get charged that rate:

The Purchase Rate: The purchase rate also known as the standard interest rate on a credit card account is generally the only annual percentage rate that consumers know they have. However, this interest rate does not apply to all balances, it only applies to the balances accumulated through general purchases such as groceries or gas. This APR generally does not apply to balances accumulated to cash advances, credit card account checks or balance transfers.

Introductory Interest Rate: The introductory APR also known as the promotional annual percentage rate is a low rate of interest that will apply to all balances on a charge card for a short period of time. Introductory annual percentage rates are used by banks to lure Americans into choosing their credit card account product over a competing product. These interest rates generally range between 0% and 6% and generally last between 6 and 12 months. Once the introductory period expires, the balances will be charged the interest rate for their specific categories.

Balance Transfer Interest Rate: The balance transfer annual percentage rate on a charge card account is generally lower than or the same as the standard interest rate. Balance transfer APRs are used to attract consumers to a charge card product provided by competing banks. A balance transfer is when some or all debt on one credit card account is paid off by some or all of the available credit on another charge card account. Balances accumulated in this way are generally charged the balance transfer annual percentage rate.

Cash Advance Interest Rate: The cash advance interest rate is generally the second highest annual percentage rate on any charge card account account. This APR is the rate of interest that will be charged for balances accumulated through cash transactions. These cash transactions can be cash back at a local grocery store, any ATM transaction and even wiring money or charge card account checks! If consumers have any option at all, it is best not to use a charge card account for cash transactions because of the high rate of interest that comes along with them.

Default Interest Rate: The default APR is one that consumers hope to never have to pay. This is an APR that will apply to all balances if people default on the account. It is a form of banks punishing people for things like late payments and spending more than the allowed credit limit. The default interest rate on most credit cards is 29.99% so it is best to try and stay away from it!

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This article was written by Joshua Rodriguez and is brought to you by: The Discover Cards,American Express Charge Cards Card Mart
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