An annual percentage rate (APR) of 15% indicates that if you carry a balance on a credit card for a full year, the balance will increase by approximately 15% due to accrued interest. For instance, if you maintain a $1,000 balance throughout the year, the interest accrued would amount to around $150.00.
Fortunately, you won’t be charged the 15% APR if you pay off the full balance by the due date every month. If you carry a balance from month to month, however, you’ll end up paying a good bit in interest. That’s because each day the balance goes unpaid, interest charges are compounded. In other words, interest is added to both your principal balance and any previous days’ accumulated interest.
Given that some months have more days than others, the credit card issuer will break down the APR using a daily periodic rate (DPR) to determine how much interest you’ll pay for a given billing period. To get the DPR for a credit card with a 15% APR, simply divide 15% by 365. The result is a rate of 0.0411% per day. Daily interest charges apply until the outstanding balance is paid in full.
This answer was first published on 09/13/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
