Balance Transfer Apr Vs Purchase Apr: What You Need To Know

**Understanding the Difference Between Balance Transfer APR and Purchase APR**

When it comes to credit cards, two popular promotional offers can make your purchases look more appealing: balance transfer APR (Annual Percentage Rate) and purchase APR (Annual Percentage Rate). While they may seem similar, these rates have distinct implications for your finances. In this article, we’ll break down the differences between balance transfer APR and purchase APR, providing you with actionable advice to maximize your savings.

**Balance Transfer APR vs Purchase APR: What’s the Difference?**

The balance transfer APR is a promotional rate offered by credit cards when you transfer an existing balance from another credit card to the new one. This rate is usually lower than your regular APR, allowing you to save money on interest charges for a specified period (typically 18 or 24 months). However, after this introductory period ends, your regular APR kicks in.

The purchase APR, on the other hand, is the standard rate applied to all purchases made on your credit card account. This rate is usually higher than the balance transfer APR and applies to all transactions, not just transfers.

**APR Figures: What You Need to Know**

Here are some approximate APR figures for popular credit cards:

* Balance Transfer APR:
+ Chase Sapphire Preferred: 20-25 months (0% for 12 months + 18-23 months at 20-24%)
+ Citi Premier: 15-19 months (0% for 12 months + 14-17 months at 15-19%)
* Purchase APR:
+ Chase Freedom Unlimited: 15.49% – 22.99%
+ Citi Double Cash Card: 18.99%

**Real Examples**

Let’s consider an example to illustrate the difference:

Sarah has a credit card with a balance of $2,000 and a purchase APR of 20%. She applies for a new credit card with a balance transfer offer that matches her original APR.

* For the first year, Sarah pays off her balance at the promotional rate (0% for 12 months), saving $300 in interest.
* In the second year, her regular APR kicks in, and she’s charged $300 in interest.
* Over time, Sarah can pay off her balance faster with the new credit card, saving a significant amount of money on interest charges.

**Actionable Advice**

To maximize your savings:

1. **Choose the right credit card**: Opt for a credit card with a lower APR that