How To Calculate The Apr On Your Credit Card
We break it down here:
The APR is given as an annual ratebut card issuers typically calculate the interest that you owe on a daily basis. To find this daily interest amount, they will divide the APR by 365 to generate the DPR.
So, if a card has an APR of 11.24%: divide 11.24% by 365. The resulting DPR is 0.0308%.
Note that some card issuers use 360 instead of 365, so it’s important to check with your issuer to confirm their methodology.
Another key component of interest calculations is your average daily balance, or the sum of your daily balances divided by the number of days in the month.
Calculating your average daily balance will be your most difficult math problem when calculating your interest, especially as many credit card statements do not provide your daily balances. Move backwards through your statement to see what the final balance was on each day of the month.
Let’s say you start the month with a zero balance for a 30-day statement cycle.
On day one: you spend $200. On day 21 you spend another $200. That means your daily balance was $200 from day one to day 20 , and then $400 from day 21 to day 30 .
To find the total sum of every daily balance in that 30 days, you do the following:
+ = + = $8000.
To find your average daily balance, you divide that sum of $8000 by the number of days in your billing cycle as $8000/30, which gives you an average daily balance of $266.67.
Interest Rate And Interest Charges
PURCHASE ANNUAL PERCENTAGE RATE
Platinum Visa Card
0% Intro APR for the first 12 billing cycles that your account is open.*
After that, 8.25% to 16.25%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.a
Rewards Visa Card
0% Intro APR for the first 12 billing cycles that your account is open.*
After that, 9.25% to 14.25%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.a
Signature Visa Card
0% Intro APR for the first 9 billing cycles that your account is open.*
After that, 11.25% to 13.25%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.a
BALANCE TRANSFER APR
0% Intro APR for the first 12 billing cycles that your account is open. Balance Transfers must be made in the first 90 days of account opening.
CASH ADVANCE APR
*New offers apply to new Visa® cards only. To take advantage of new credit card program, you must apply for a new card. New Account bonuses do not apply for credit card upgrades.
Prime Rate: Variable APRs are based on the 3.25% Prime Rate as of 3/17/2020
aWe add 5.00% to 13.00% to the Prime Rate to determine the Purchase APR. Maximum APR 18.00%.
bWe add 15.00% to the Prime Rate to determine the Cash Advance APR. Maximum APR 18.00%.
cBalance Transfers must be made in the first 90 days of account opening.
We’d love to see you!
Southwest Airlines Rapid Rewards Premier Credit Card Review
We publish unbiased product reviews our opinions are our own and are not influenced by payment we receive from our advertising partners. Learn more about how we review products and read our advertiser disclosure for how we make money.
The Southwest Airlines Rapid Rewards Premier credit card can pay off for people who travel a lot on the airline, which typically scores very well in customer-satisfaction surveys. Members earn a generous introductory points bonus and earn 2X points on Southwest purchases, with no foreign transaction fee. After the first year, theres also a 6,000-point anniversary bonus whose value when used for Southwest Flights can help justify the cards ongoing $99 annual fee.
Don’t Miss: Ultamate Rewards Credit Card Payment
Chase Southwest Personal Credit Cards Comparison
The first major difference you’ll notice between these three cards is in their annual fees. The Plus card charges a $69 annual fee, while the Premier and Priority cards charge $99 and $149, respectively.
The anniversary bonuses are also different for each card:
Read more: Southwest Rapid Rewards Premier card review
As part of recent updates, the Southwest Rapid Rewards® Plus Credit Card and Southwest Rapid Rewards® Premier Credit Card now offer two EarlyBird Check-Ins per year and 25% back on inflight purchases.
However, the Southwest Rapid Rewards® Premier Credit Card and Southwest Rapid Rewards® Priority Credit Card cards do not charge a foreign transaction fee, and both cards can earn you Tier-Qualifying Points toward Southwest A-List status. You’ll earn 1,500 TQPs for every $10,000 you spend on the cards in a calendar year, and there’s no limit to the number of TQPs you can earn .
A-List status requires 35,000 TQPs earned in a calendar year, and gets you benefits like priority boarding and a 25% points bonus on paid flights.
Southwest Rapid Rewards® Priority Credit Card holders get a few extra perks :
- $75 Southwest annual travel credit
- Four upgraded boardings per year when available
- 25% back on inflight drinks and Wi-Fi
With all three cards, you can earn 50,000 bonus points after spending $2,000 on purchases in the first 3 months from account opening, plus 50,000 more bonus points after spending $12,000 total on purchases in the first 12 months.
Apply For Our $mart Visa Credit Card Today And Start Enjoying These Amazing Benefits:
Low, fixed annual percentage rate based on credit score at time of application
Maximum of $25.00 late fee after 10-day grace period
Accepted for purchases and services worldwide
Instant cash advances wherever the VISA® logo is displayed
Same low APR for cash advances and purchases
NO annual fee
Earn points for every purchase through our uChoose Rewards program
Redeem points online for cashback, merchandise, travel rewards and more
No balance transfer fees
Must be a member to apply. Not a member? Become a member today by opening a $mart Share Savings Account! Our credit card is just one of the many benefits of being a credit union member. As a member, youll enjoy lower interest rates on loans, higher yields on savings, free financial education and counseling, and much more!
You May Like: Citibank Best Buy Credit Card Login
How To Use The Information In A Schumer Box
The purpose of a Schumer box is to provide consumers an easy-to-understand way to review what the rates and fees are on a particular credit card so they can make an informed decision about which card to choose.
For example, someone trying to decide between two cash back cards should look beyond just the cash back to determine if one card is a better fit than another. If both cards earn rewards at the same rate, but one charges an annual fee, the no-annual-fee card is likely a better option. Similarly, someone who typically carries a balance may find that a card with an annual fee but a low-ongoing interest rate may be a less expensive choice than a card with no annual fee but a higher interest rate. By using the details highlighted in a Schumer box, its much simpler to compare the options.
How To Use The Southwest Rapid Rewards Premier Credit Card
When you sign up for the Southwest Rapid Rewards Premier Credit Card, youll want to make sure you meet the minimum spending requirement for the bonus. This means spending at least $1,000 on your card within three months of account opening.
Make this your go-to card for any purchases you make with the airline, to take advantage of the 3 points per $1 you spend with Southwest.
Read Also: Pay My Victoria Secret Card
Rapid Rewards Premier Business Credit Card
If you’re a business owner, the Southwest Rapid Rewards Premier Business Credit Card affords you the opportunity to rake in rewards points. An annual fee of $99 does apply, but that’s a small price to pay for the earnings generated if you’re a business owner who travels frequently via Southwest Airlines. WalletHub describes this card as “jet fuel for your travel budget, offering over $1,000 in free airfare from first-year rewards alone.”
This card comes with a generous introductory offer of 60,000 bonus points. To be eligible for this offer, you must spend $3,000 or more in purchases during your first three months as a cardholder. Additionally, cardholders are also entitled to earn an unlimited number of points through the same tiered rewards system as individuals. This entails:
Two points per dollar spent on purchases made directly through the airline
Two points per dollar spent with hotel and car rental partners
One point per dollar spent on all other purchases
6,000 bonus points on the account’s anniversary date
Even better, employee cards are available free of charge and their expenditures also help you accrue even more Rapid Rewards points. Plus, there’s no foreign transaction fee, so the card is a good fit if you or your employees travel abroad to conduct business.
What Are The Disadvantages Of A Low Apr Credit Card
But these advantages should be weighed up against the following potential downsides:
There are cheaper ways to borrow: A 0% purchase, balance transfer or money transfer credit card can work out cheaper, providing you are able to clear the balance before the 0% deal ends.
You may not get the rate advertised: The advertised APR only needs to be offered to 51% of successful applicants. The remaining 49% may be offered a different, higher rate. Youre more likely to be offered a higher APR if your credit score is low.
The low APR may not apply to all transactions: Depending on the card, you may be offered a low APR for purchases, but balance transfers and cash withdrawals could be charged at a much higher rate. Always check carefully to ensure you dont get caught out.
Also Check: How Do I Check My Cabela’s Credit Card Balance
How To Manage Your Credit Card Interest
Calculating your credit card interest is just the first step. By monitoring your APR and by aiming to pay off your balance as much as you can, you can pay much less in interest and improve your credit score at the same time. Of course, if you pay your balance in full within the specified grace period every month, you won’t have to pay any interest on purchases. You may still be charged interest for other types of transactions like when you use your card to get cash.
Keep your credit card interest at a healthy level by doing the following:
Delta Skymiles Gold American Express Card
Another good alternative to the Southwest Priority card is the Delta SkyMiles Gold American Express card. The Delta Gold card offers a similar rewards rate to the Southwest Priority, but it offers more category variety and comes with a slightly lower annual fee. Delta SkyMiles are also worth slightly more than Rapid Rewards points by our estimates and can be used on a much larger flight network.
Don’t Miss: How To Cancel Jcpenney Credit Card
Is The Southwest Rapid Rewards Plus Credit Card Right For You
Frequent Southwest flyers will find a lot to love about the Southwest Rapid Rewards® Plus Credit Card because it offers so many of the same benefits as its higher-end siblings.
Just keep in mind that you won’t get the side benefits found on the more expensive Southwest co-branded cards. And if you’re seeking a card for use overseas, or one that offers more rewards flexibility, consider other options.
Mbna True Line Mastercard*
If youre carrying a balance, youll want to get that debt onto a lower-interest card as quickly as possible. With a rate of 12.99% on balance transfers and new purchases, the MBNA True Line is worthy of consideration. Add the fact that this card commands no annual fee, and this is a powerful card for someone trying to pay off their debt.
- Interest rate on balance transfers and purchases: 12.99%
- Additional benefits: Add up to 9 authorized users without an additional fee
Welcome offer: Get a 0% promotional annual interest rate for 12 months on balance transfers within first 90 days of opening the account.
- Note: this offer is not available for residents of Quebec
Southwest Rapid Rewards Premier Credit Card Drawbacks
- Chase 5/24 rule. The Southwest Rapid Rewards® Premier Credit Card is subject to Chases 5/24 rule. This means your credit card application will be automatically denied if you have opened five or more credit cards in the past 24 months.
- You can have only one Southwest credit card. If you already have a Southwest personal credit card, you wont be eligible to get the Southwest Rapid Rewards® Premier Credit Card. Even if you had a Southwest card and you closed it to open a new one, you still wont be eligible if you earned a Southwest credit card signup bonus in the past 24 months.
Is the annual fee worth it?
Yes. The card has a $99 annual fee thats not waived for the first year.
To break even on it with rewards, youll need 7,615 points according to our May 2021 valuation. Thats $3,807 spent on Southwest purchases or $7,614 spent on other purchases. Thankfully, as long as youre traveling with Southwest and using your card perks, you shouldnt have to pay a dime to make up for the cost of the card. The 6,000 anniversary points will cover much of the cost of the card and the 2 EarlyBird Check-In passes more than make up the rest.
What can I get for 50,000 Rapid Rewards points?
You can get a lot out of 50,000 points, which are worth around $640 according to our valuation at the time of writing.
You can potentially redeem these points for a few one-way flights. Here are a few Wanna Get Away award fares you might find on the Southwest website:
What To Expect From Cards With High Apr
If you pay your credit cards off every month, never miss a payment and never carry a balance, you will never pay higher APR associated with a rewards credit card. If this looks like how you use credit, the rewards from credit cards can be a valuable perk and you should check out the Forbes guide to the best rewards credit cards
On the other hand, if you are planning to finance a purchase with a credit card, sometimes miss payments or occasionally carry a balance, dont be tempted by high APR credit cards offering rewards what you earn in rewards will be miniscule in comparison to interest charges on high-APR credit cards.
Don’t Miss: First Premier Credit Card $95 Fee
Calculating Interest On A Credit Card: The Complex And More Accurate Version
This approach takes your daily periodic rate into account. This is the calculation your credit card company uses to calculate finance charges for a specific billing cycle. With this strategy, you need to divide your APR by 365, then multiply it by the balance and also multiply it by the number of days in your billing cycle.
In our example, this means you would divide 15.99% by 365 and multiply it by $3,000 and by 30 . This yields a monthly interest charge of $39.42. If you were to pay off some of your balance during the first half of your billing cycle, you could use this formula to calculate a more accurate interest charge amount at the end of the billing cycle because the daily balance amount would change.
How To Qualify For A Good Apr
Many factors contribute to the APR you receive when opening a new credit card account, but the first detail any lender wants to know is if payments on previous accounts have been made on time. Payment history makes up 35% of a and remains the most important factor when a lender determines creditworthiness. Lenders are more likely to issue a lower APR to those who have a long-established history of paying bills on time.
ratio makes up a large portion of a credit score. The credit utilization ratio is computed by taking the total amount owed and dividing by total credit limit. Customarily, a good credit utilization ratio is considered to be below 30%both on each individual card and across all accounts. Using only a small amount of total credit available and paying off balances in full each and every month is a good way to qualify for a lower APR.
A savvy approach to securing a good APR on a credit card is to consider applying for one with an introductory or promotional offer. Banks will routinely offer 0% introductory APRs on purchases and balance transfers with terms lasting as long as 20 months. A credit card with a 0% APR introductory rate is a viable option for those looking to finance a large purchase or who need to pay down debt from a high interest credit card. Be mindful that once the 0% promotional period expires, the APR will increase to the regular rate.
Also Check: Cabelas Visa.com
Consider If You Want The Southwest Companion Pass
The Southwest Companion Pass lets you choose a designated companion to fly with you nearly for free for up to two years. To earn the pass, you must collect 125,000 qualifying Rapid Rewards points or fly 100 qualifying one-way flights with Southwest in a calendar year.
Youll want to opt to earn points on a Southwest credit card instead of a Chase Sapphire card if earning Companion Pass points is your goal.
All Southwest co-branded credit cards earn Companion Pass-eligible points, which includes both points earned through purchases and those earned through a credit card sign-up bonus. This makes Southwest credit cards an indispensable way to help you earn one of the most valuable perks in travel.
Chase Ultimate Rewards® points transfer to Rapid Rewards points, but these transferred points do not qualify as Companion Pass-eligible points.