Glossary
Variable APR
A variable APR is an interest rate that moves with an index, usually the prime rate: the card or loan adds a fixed margin to the index, so the APR rises and falls with it.
Almost all credit cards have variable APRs. The margin (for example, prime + 18.74%) is set when you open the account; the index changes. Your agreement says how soon changes apply, usually from the next billing cycle.
A rise in the prime rate isn't an issuer "raising your rate" under the CARD Act, which limits discretionary increases on existing balances.
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Where you’ll see it on RateHerald
Related terms
- Prime rateThe base interest rate banks use for many variable-rate loans and credit cards, set 3 percentage points above the top of the Federal Reserve's federal funds target range.
- APR (annual percentage rate)The yearly cost of borrowing as a percentage: on a credit card, the interest rate on balances you carry; on a loan, the interest rate plus certain fees.
- Penalty APRA higher interest rate, often near 30%, that a card can charge after you pay late: on new purchases with 45 days' notice, and on existing balances once a payment is 60 days late.
Sources: CFPB: Regulation Z, 12 CFR 1026.55