The Annual Percentage Rate (APR)

The interest rate for a credit card is usually expressed as an annual percentage rate, or APR for short. The APR is the yearly interest rate.

Many cards have different APRs, which is why it's important to read the fine print when applying for a new credit card:

• Different APRs for different card uses. The APRs for purchases, cash advances and balance transfers may all be different.
• Introductory rate. New applicants are often given a low introductory APR for a fixed period of time, after which the APR increases to the normal rate.
• Tiered APRs. The rates charged depend on how much of the credit card balance is outstanding. Typically, the more you owe, the higher the interest rate charged.

Even a small change in the APR can make a large difference in the interest you'll have to pay if you don't pay your balances in full each month.

Most credit cards have fixed-rate APRs: the APR rarely changes. A few cards have variable-rate APRs that are tied to an external interest rate, typically the bank's prime rate. The interest you pay can therefore vary greatly over time. If stability is important, choose a fixed-rate credit card.