GUIDESCREDIT CARDS
Find Out How The APR on a Credit Card Can Impact Your Debt
2 MIN • 
LAST EDITED BY ANOOP MENON ON APRIL 23, 2025.
LAST EDITED BY ANOOP MENON ON APRIL 23, 2025.
GUIDES LAST EDITED BY ANOOP MENON ON APRIL 23, 2025.
Most of us use at least one credit card. But when you are unfamiliar with the terms and technicalities of credit instruments, handling your expenses can get tricky.
The last thing anyone wants is to get trapped in a vicious cycle of debt. To avoid this, you need to know answers to questions like 'What is a secured credit card,' & 'What is the APR on a credit card,' etc. Understanding how it works, its advantages and disadvantages, and the different ways to reduce the APR can help you maximise your credit limit.
One of the most common terms associated with the credit card is the Annual Percentage Rate, or APR. By definition, APR is the yearly interest charged for a sum of money to the borrower, including additional fees and costs along with the transaction. This provides a bottom-line number to the consumer to compare lenders and credit cards to take an informed decision. However, compounding is unaccounted for here.
The interest charges are levied on your monthly statement when using a credit card. You are charged an additional amount if you fail to pay within the interest-free term. Many banks calculate this interest using the Daily Periodic Rate (DPR), as certain months have more days than others. DPR is the APR divided by 365 or 360.
So, what is the APR on a credit card you use? You need to know the Average Daily Balance or ADB to calculate your credit card interests. The monthly interest would be DBR multiplied by the billing cycle and ADB.
Unlike other credit cards, you pay the deposit upfront if your card is a secured credit card. Your credit history and credit score determine your eligibility. But a security deposit is required for the line of credit if you use a secured credit card.
Now, what is the APR on a credit card if it is a secured credit card? Although the answer varies across different lenders, the rate is usually high. So, why is a secured credit card's APR high? Typically, secured credit cards incur a higher APR and lower credit limit due to bad credit history. Naturally, the risk associated with these cards is the primary reason for the high APR.
Despite its significance, APR is not the most accurate reflection of the cost of borrowing. Sometimes, it even understates the actual cost of a loan. If you do not have a good credit history, the only option is a secured credit card with a high APR. But it is always advisable to consider all factors of a credit card and understand the risks before getting one.
You can get a Fi-Federal Co-Branded Credit Card on Fi with a limit of up to ₹200000, depending on the above factors. Plus, the card offers additional benefits like accelerated rewards of up to 5X whenever you spend on any of India's top 21 brands. Plus, all the bells & whistles like Lounge Access, Low Forex Fee, Instant Issuance of the Credit Card, Customised Reminders, Spend Insights, and more. Users with good credit scores are even eligible for pre-approved instant loans.
The best practices to reduce the APR on your credit card are as follows:
Maintaining a good credit score is crucial to getting the best APR rates, whether your card is secured or not.
A higher APR means you have to pay higher interest on any money you borrow on the credit card and do not repay it in time. On average, anything over 24% APR is considered too high for any loan you take.
