Loans & Credit

What Is a Penalty APR?

A penalty APR is a higher interest rate a credit card issuer can apply after certain events, most commonly a payment that is significantly late. It can be much higher than the card's regular purchase APR. The conditions that trigger it, and how it can be removed, are listed in the cardholder agreement.

US Rules

Under US credit card rules, a penalty rate on an existing balance generally requires a payment more than 60 days late, and issuers must review the account and may restore the lower rate after a period of on-time payments.

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🔗 Related Terms

APR (Annual Percentage Rate) Late Fee Minimum Payment Grace Period

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.