How Your Credit Card’s Annual Interest Rate Can Double
The annual interest rate on credit cards is ridiculously high, averaging 16.75%, according to the latest figures from CreditCards.com . (This is an all-time high, by the way.) But make a mistake when paying, and you may end up with double the astronomical rate for several months thereafter.
If you delay the minimum credit card payment by more than 60 days, your issuer may apply a “one-year penalty rate,” which, according to Credit Karma, can be as high as 29.99%. This higher rate can be applied to your current and future balance for six months.
After six months, your lender should reevaluate your rates for Credit.com . If during these months you made all payments on time, hopefully your rate will return to normal.
To find out how much your issuer charges, see the terms of use for your card. Not all cards apply fines – Chase, Citi, and Discover offer cards without an annual penalty rate , according to LendEu – although many do , and those without fines are likely to have stricter requirements. Make sure your payments arrive on time ( or sooner ) by either automating them or setting a calendar reminder to due date.
You need to make at least a minimum payment to maintain your base annual interest rate, although you should strive to pay your entire bill every month to avoid running into debt. If you need help , check out some of our debt resources .