What Is a Purchase Rate?

The term purchase rate refers to the interest rate applied to regular purchases made with a credit card. Also called the 澳洲幸运5官方开奖结果体彩ꦆ网:purchase aꦏnnual percentage rate (APR), this is the rate most people refer to when they think of a credit card rate. The purchase interest rate is applied to any unpaid purchase balances at the end of the 澳洲幸运5官方开奖结果体彩网:billing cycle and doesn't apply to other incurred interest charges. It can be thought of as the purchase intere🎉st charge.

Understanding Purchase Rates

Financial institutions charge credit card borrowers a purchase rate—also known as a purchase annual percentage rate (APR)—for any regular purchases on their Visa, Mastercard, Discover, or American Express 澳洲幸运5官方开奖结果体彩网:credit cards. This is the most common interest rate borrowers pay on their cards. Individuals and businesses looking for a credit card often seek out low purchase rates, which apply to the majority of 澳洲幸运5官方开奖结果体彩网:transactions on a credit card.

The purchase rate is only applied by the credit card issuer to any unpaid balances when the borrower pays less than the total statement balance. If, for example, there's a $100 unpaid balance at the end of the month, the borrower is responsible for paying that amount plus interest on that remaining balance—or the minimum payment—on the next due date. No interest charge is incurred if the borrower pays off their balance in full before the due date.

Lenders determine a borrower's purchase rate based on their creditworthiness and credit history. The lowest rate that banks normally charge is the 澳洲幸运5官方开奖结果体彩网:prime rate. This rate typically follows trends in the U.S. Federal Reserve’s federal funds rate, which is usually the federal funds rate plus approximately 3%.

The prime rate provides a basis for credit card issuers to make interest rate offers in a 澳洲幸运5官方开奖结果体彩网:credit agreement. The amount of interest on credit cards above the prime rate—which stood at 7.5% as of April 2025—that's charged by most banks is known as the spread. At the same time, the 澳洲幸运5官方♉开奖结果体彩网:median average credit card interest rate was 24.20%. However, some issuers add a considerably larger margin to the prime rate index, resulting in rates ranging up to 35% or higher for those with no credit or 澳洲幸运5官方开奖结果体彩网:bad credit.

Annual Percentage Rate (APR)

Annual percentage rate, or APR, is expressed as a percentage and shows how much 澳洲幸运5官方开奖结果体彩网:you would pay to borrow funds over a year. Credit card APR is charged differently from interest on other types of financing. As noted above, as long as you pay your balance in full by your monthly due date, you can typically avoid paying credit card interest altogether.

Credit card APRs vary based on the type of charge incurred. A lender may charge one APR for purchases, another for 澳洲幸运5官方开奖结果体彩网:cash advances, and yet another for 澳洲幸运5官方开奖结果体彩网:balance transfers from another card.

Banks also charge high-rate penalty APRs to customers🍷 for late payments or violating other cardholder agreement terms. Many credit card companies also offer an introductory APR—a low or 0% APR—to entice new customers to sign upও for a card.

Types of Purchase Rates

Introductory Rates

If a credit card offers a 0% 澳洲幸运5官方开奖结果体彩网:introductory rate, the purchase rate may begin at 0%. The length of time an introductory rate may apply varies by credit card. Introductory rates typically range from 12 to 15 mont﷽hs, though some card companies offer more generous promotional periods.

Once the introductory time frame expires, the purchase rate increases to the card’s go-to rate. The go-to rate is the purchase ra♒te or the standard rate of interest charged on outstanding balances at the end of each payment cycle for purchases made with the card.

Variable Rates

Many credit cards come with a 澳洲幸运5官方开奖结果体彩网:variable interest rate. This rate is based on the prime rate plus a margin and can change from time to time🥃 if the Federal Reserve raises or l꧂owers the federal funds rate.

Variable interest rate conditions are outlined in the lender's terms and conditions.

Purchase Rates vs. Other Credit Card Rates

As noted above, the purchase rate applies only to regular purchases made with a credit card, such as department or grocery store purchases. Credit cards may also charge customers other rates. Along with the regular purchase rate, lenders list all rates in the card's terms and conditions.

Balance Transfer Rate

If you transfer a balance from one card to another, the latter's issuing bank sometimes charges you a different interest rate than the purchase rate for that transaction. This is referred to as the balance transfer rate. It may be the same rate as your purchase or higher, or may be 0% for a set period of time in order to incentivize transfers.

This rate is also charged at the end of the month. Balance transfers are typically subject to an additional fee called the balance transfer fee—usually the greater of a percentage of the balance transferred or a minimum dollar figure fee, like $5.

Cash Advance Rate

Another rate charged by credit card issuers is the 澳洲幸运5官方开奖结果体彩网:cash advance rate. This is applied to any amount a borrower withdraws from an 澳洲幸运5官方开奖结果体彩网:automated teller machine (ATM) or at a bank teller against the cash advance line of their credit card. The rate is almost always higher than the purchase rate and, based on the card, can range anywhere from 15% to 30%.

Unlike the regular purchase rate, cash advance interest has no 澳洲幸运5官方开奖结果体彩网:grace period and ac𓆏crues the moment the borrower takes out a cash advance. Just like a balance transfer, credit card cꦉompanies charge a cash advance fee—normally the greater of either a percentage of the balance or a set dollar amount—at the same time.

The Bottom Line

Purchase rate refers to the interest rate applied to regular purchases made with a credit card. Also known as the 澳洲幸运5官方开奖结果体彩🐭网:purchase annual percentage rate (APR), it's the rate most people refer to when th🌊ey think of a credit 🐠card rate.

The purchase interest rate is applied to any unpaid purchase balances at the end of the billing cycle and doesn't apply to other incurred interest charges. It's important to understand that you can avoid paying the purchase interest on your credit card if you pay off your balance before the due date.