Which term describes a higher interest rate triggered by being late with or missing a credit card payment?

• A. Intro APR
• B. Penalty APR
• C. Standard APR
• D. Purchase APR

Answer: (B)

A penalty APR is a higher interest rate that a credit card issuer can apply when you’re late with or miss a payment. This rate is designed as a consequence for not paying on time, and it can apply to existing balances and new purchases, making carrying a balance much more costly. It’s different from an intro APR, which is a temporary promotional lower rate, and from the standard ongoing rate or the regular purchase APR, which are the normal rates under typical on-time payment conditions. The penalty APR kicks in after a late payment and, depending on the card’s terms, can stay in effect until you bring your account back to good standing or meet specific conditions to revert to the previous rate.