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Home > Learning Center > Complete Guide to Credit > Chapter 4 > Periodic Rate
  Chapter 4
  Choosing a Credit Card
  Who are You?
  Interest Rates
  Periodic Rate
  Grace Period
  Finance Charges
  Look for the "Schumer Box"
  "Credit Cards" that Aren't
  Cash Advance Fees
  Late Fees
  Over-Limit Fees
  Comparing Numerous Cards
  Credit Card Scams
  Secured Credit Cards
  Conclusion
  Previous Chapter
  Next Chapter
  Contents

 

Periodic Rate

Because “APR” is the abbreviation for annual percentage rate, and because credit card issuers send out their bills monthly, they do not use the APR to calculate the finance charges you owe in a given billing cycle.

Instead, they use what’s called the periodic rate. This is the APR divided by 12 (as in 12 months). So if your card has an APR of 12 percent, the periodic rate would be 1 percent.

That explains why you’ll see periodic rate for new charges on your credit card bills, along with the APR for your outstanding balance.

Next: Grace Period

  

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