How and Why Your Credit Card APR May Change

You may not think your credit card APR changes much. But anything from a shifting economy to late payments or changes in your credit score can trigger an APR to rise or fall.

By Elliot M. Kass | American Express Credit Intel Freelance Contributor

5 Min Read | September 22, 2020 in Cards



There are a number of reasons why your credit card’s APR may change, and some of these are outside your control.

Some changes are insignificant – especially if you’re paying off your full balance on time each month.

But if your APR goes up substantially, there are several things you can do to minimize the impact.

The number one reason people apply for a particular credit card is that it offers an attractive annual percentage rate on purchases, better known as the APR.1 While credit cards usually have multiple APRs – an APR for purchases and different APRs for cash advances, balance transfers, and introductory rates – it’s the purchase APR that concerns most people. Purchase APRs aren’t set in stone, and as time goes on your card issuer may raise or lower it – although lowering happens less often. 


The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 regulates the conditions under which a credit card issuer may change your card’s APRs.2 It also requires that they alert you to changes in advance, except under certain conditions. Even so, card APRs rise and fall all the time. Let’s take a look at five common circumstances under which your card rate can change, and what you might want to do about it if it does.3


1. Your 0% Intro Credit Card APR Comes to an End

It’s smart to take advantage of a new 0% intro APR credit card promotional offer to finance a big purchase or transfer debt from a card with a higher rate. But the 0% introductory rate will typically only last for six to 12 months before a higher rate kicks in. How much higher depends on various factors – but the most important is likely to be your credit score. The average APR for all U.S. credit card account holders was 14.52% in May 2020, and usually hovers around 15%.4 


And take note: While the CARD Act requires issuers to provide at least 45 days' notice before changing the terms of your account, an expiring promotion is exempt from this rule. Keeping tabs on when the intro rate ends and the new APR kicks in is up to you.


2. Your Payment is Late

Paying a credit card bill late usually triggers a late fee and can lower your credit score. What’s more, once you’re 60 days or more overdue your card issuer has the right to impose a penalty APR, which could be as high as 29.99% and apply to the entire balance on your card. In most cases, the CARD Act doesn’t allow the interest rate on an existing balance to rise. In other words, if your APR goes up, the new rate will apply only to new charges going forward. But this doesn’t hold if the higher APR is imposed as a penalty, in which case the new rate can apply to your outstanding balance as well. On the flip side, if you make at least the minimum payment for six months, the card company is obligated to remove the penalty APR.


3. Your Credit Score Falls

If your credit score drops substantially, your card issuer is entitled to increase the APR. Fortunately, you will get advance notice of at least 45 days that this is about to happen, giving you an opportunity to pay down your outstanding balance or find a new card with a lower rate. The card company is also obligated to reassess this every six months, so if your score goes back up your rate may come down again.


4. Economic Conditions Shift

The APR on most credit cards is variable and is tied to the prime rate, which is the rate banks charge their best customers. If the prime rate goes up, your credit card APR will follow suit. And if the prime rate falls your credit card APR will also decline. For a deeper dive, read “How Fed Rate Cuts Impact Your Credit Card Interest Rate.” Because minor fluctuations in the prime rate are common, you may not receive advance notice of these APR changes, which are usually quite small. If you don’t have an outstanding balance on your card – or if your balance is small – you may not to even notice the change.


5. Your Credit Card Passes its First Birthday

Unless you’ve signed up for a special promotion with its own expiration, the CARD Act prohibits APR changes for a full year after you first receive your credit card. But once the first 12 months are up, the issuer is free to raise your rate.


What Can You Do if Your APR Increases?

If your APR goes up, there are several things you may want to do:5

  • Pay the balance in full. If you’re not carrying a balance from month to month, then your card’s APR becomes irrelevant.
  • Negotiate with your card issuer. Sometimes this can be as easy as calling your credit card company and asking for a lower rate. They may only consider your request, however, if you always pay your bill on time and avoid carrying a large outstanding balance from month to month.
  • Apply for a new card and transfer your balance. If you can find a low-interest balance transfer credit card, for a small fee you can move your balance from the old high-interest card to the new one with a lower rate – or even a temporary 0% APR credit card. For more insight, read “Best Ways to Use a 0% Balance Transfer Credit Card.”


The Takeaway

There are a number of reasons why your credit card APR may change, and more often than not it will go up, not down. But if you use your card responsibly, you may not even notice the change, and there are steps you can take to minimize any impact.

Elliot Kass

Elliot Kass is a journalist who has covered global business and technology from New York, London, and San Francisco for more than 30 years.


All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

Related Articles

Do You Need a 0 Interest Credit Card?


Zero interest credit cards can help you save money, but make sure you choose wisely. Follow these rules to avoid penalties in the future.


Tell me more

What is APR and How to Calculate It


Learn what annual percentage rate (APR) is, how to compare different types of APR and how to calculate it.


Tell me more

Tips for Using 0% Intro APR Credit Cards to Borrow Money


Used responsibly, 0% intro APR credit cards can be a great source of inexpensive borrowing and can add to your financial flexibility. But it pays to read the fine print.


Tell me more

The material made available for you on this website, Credit Intel, is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.