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2 mins Read | 6 Months Ago

Everything you need to know about a Credit Card’s APR



While reviewing your monthly Credit Card Statement, you will come across references to Annual Percentage Rate (APR) that signifies the interest associated with your credit account. APR encompasses the total cost of financing, which includes additional fees associated with obtaining a loan.

With a Credit Card, APR is most common when you carry a balance. However, different transactions—like cash advances and late payments—are also subject to APRs, which might be higher than the normal rate.

Everyone with a Credit Card needs to recognise how APRs work, the types of APRs and how to avoid them with sound financial habits.

What is an APR on a Credit Card?

APR on a Credit Card is the annual interest you will pay, if you carry a balance. This is a price charged to Credit Card customers by card issuers for borrowing money.

APR has a slightly different meaning for Credit Cards, than other financial products. While an APR for different types of loans includes interest fees and prices, for a Credit Card APR is synonymous with the interest rate.

A majority of Credit Cards have variable APRs, which change through the years based totally on the prime rate determined. Most Credit Cards also have many APRs based on the transaction type, which makes calculating interest fees even tougher.

Different types of Annual Percentage Rate

Most people are familiar with Purchase APR. However, there are other types of APRs:

1. Purchase APR

This corresponds to the interest rate applicable to all purchases made using your card, whether online, in-person or over a phone call.

2. Introductory APR

This constitutes a promotional interest rate offered for a limited duration, which is lower than the card's standard APR, sometimes in the form of a zero-percent introductory APR. It may apply to purchases, balance transfers or both. Once the introductory period concludes, the regular APR becomes effective.

3. Cash Advance APR

The rate for borrowing cash from your Credit Card typically surpasses your purchase APR. It does not come with a grace period. It is frequently employed for convenience checks.

4. Penalty APR

This is enforced for returned or missed payments. You may need to make several consecutive on-time payments before your Credit Card provider removes the penalty APR. Payments made over 60 days late, may also result in penalty APR being applied to your current balance.

The function of the Annual Percentage Rate

After determining your APR, you can employ it to compute the interest on your Credit Card balance. Use the following formula to determine the interest accrued during a given billing cycle: Credit Card interest = [daily rate] x [average daily balance] x [days in billing cycle]

Daily Rate

You can ascertain this by dividing your Credit Card’s APR for purchases, by the number of days in a year (365).

Average Daily Balance

Sum up your daily balances throughout the billing cycle and then divide this total by the number of days in the billing cycle. This figure represents your average daily balance.

Days in the Billing Cycle

Next, multiply your daily rate by your average daily balance, then multiply this by the number of days in the billing cycle—interest compounds daily with most issuers.

How is an APR on a Credit Card calculated?

The APR for Credit Cards is vital in figuring out the interest you will pay on your outstanding balance. In the case of ICICI Bank Credit Cards, the APR is influenced by different factors, including your credit report and credit score. A good credit score will help you secure a Credit Card with a lower APR, while a bad score may bring a higher APR.

The actual calculation of APR may vary depending on the Credit Card and the bank's policies. ICICI Bank gives APR Credit Cards starting from 2.49% to 3.67%. The APR is disclosed in the terms and conditions of the Credit Card and it can change at any time, totally at the Bank's discretion.

To calculate the interest on your ICICI Bank Credit Card, you need to understand the relevant interest rate and your outstanding balance. The interest is charged on the unpaid amount. If you decide to pay less than the full amount, the remaining balance will bring about interest.

It is vital to know about the fees and charges related to your ICICI Bank Credit Card, cash withdrawal charges, late payment fees and Forex charges. Understanding these fees, can help you control your Credit Card utilisation and avoid pointless expenses.


When it comes to Credit Cards, APR is a critical factor to keep in mind. ICICI Bank offers a range of APR Credit Cards with exclusive APRs, primarily based on various factors consisting of the customer's credit history, purchase behaviour and repayment tendencies. As you compare Credit Cards, pay special attention to the different APRs listed in the card's terms and conditions and whether or not they are variable or fixed.

ICICI Bank Credit Cards offer several features and benefits, including cashback, reward points and discounts on travel, dining and shopping. Additionally, ICICI Bank Credit Cards come with various safety features, including zero liability for lost or stolen cards and 3D secure authentication for online transactions. Consider the full package before applying for an ICICI Bank Credit Card to ensure that you get a great deal suited to your needs.


How can I manage and minimise APR charges on my Credit Card?

To minimise APR charges, consider paying your balance in full each month. If that is not possible, aim to make more than the minimum payment to reduce the outstanding balance. Additionally, explore balance transfer options to help consolidate debt at a lower interest rate. At ICICI Bank, we offer specialised Credit Cards with favourable terms for balance transfers.

Does APR matter if I pay in full?

If you pay your ICICI Bank Credit Card balance in full and on time every month, the APR may not matter as much to you. However, if you carry a balance from month to month, the APR will determine the interest you will be charged on the outstanding balance.

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