Design preview. Not public yet.

Money

APR and interest in plain English

A credit card's interest rate is the price you pay for borrowing, written as a yearly percent called the APR. Pay the full statement balance by the due date and you usually pay no interest on purchases.

Easy10 min to readFree

You'll need

  • A recent credit card statement

What to know

  1. Find the APR on your statement or in your card agreement. It's the price of borrowing, shown as a yearly rate (CFPB).
  2. Find the due date. Card companies have to get your bill to you at least 21 days before the payment is due (CFPB).
  3. Pay the full balance by the due date if you can. Most cards give a grace period on purchases, so paying in full means no interest on them (CFPB).
  4. If you can't pay in full, pay as much over the minimum payment as you can. Run your own numbers in the credit card payoff calculator.
  5. Skip cash advances. Interest on those generally starts the day you take the cash (CFPB).
Watch out. If you don't pay in full one month, you can lose the grace period for that month and the next, so new purchases start costing interest right away (CFPB).

See it done

Credit 101: What is APR and why does it matter?Khan Academy · Length 3:26 · 2023

Video blocked on this network? You don't need it. The written steps above are the whole lesson, and the video is extra. Watch it on YouTube later.

Good to know

Why minimums hurt

Paying only the minimum keeps you current, but most of the payment goes to interest, so the balance shrinks slowly. The calculator shows how long it takes.

Payday loans are worse

A typical payday loan fee works out to an APR of almost 400% (CFPB). Credit card APRs look small next to that, but they still add up.

Cars and loans have APRs too

When you finance a car, compare the APR and the total cost, not just the monthly payment (FTC).

Sources

  1. Consumer Financial Protection Bureau What is a credit card interest rate? What does APR mean?
  2. Consumer Financial Protection Bureau What is a grace period for a credit card?
  3. Consumer Financial Protection Bureau What are the costs and fees for a payday loan?

Lesson M5.1 · Last checked October 2, 2026 against the sources listed. See a mistake?