Balance Transfer Apr Vs Purchase Apr: What You Need To Know (Part 28)

**Balancing Act: Understand the Difference Between Balance Transfer APR and Purchase APR**

When it comes to managing your debt, choosing the right credit card balance transfer option can make all the difference. Two popular options are Balance Transfer APR (Annual Percentage Rate) and Purchase APR (Annual Percentage Rate), but which one is best for you? In this article, we’ll break down the key differences between these two rates, provide real examples, and offer actionable advice to help you navigate this complex topic.

**What is Balance Transfer APR?**

Balance Transfer APR is a promotional rate offered by credit card issuers when you apply for a new card with a 0% introductory APR period. This means you can charge purchases or balance transfers without incurring interest charges during the introductory period. However, after the introductory period ends, your regular Purchase APR kicks in.

**What is Purchase APR?**

Purchase APR is the standard rate charged by credit card issuers for ongoing balances. It’s typically higher than the Balance Transfer APR and reflects the average daily balance of your account.

**APR Figures: A Comparison**

Here are some approximate APR figures to give you an idea of what to expect:

* 0% Balance Transfer APR: 12-20 months (e.g., Citi Simplicity Card’s 15-month introductory period)
* Purchase APR:
+ 14.99% – 23.99%
+ Credit unions and online banks often offer even higher rates

For example, let’s say you have a $2,000 balance on your credit card with a 12-month 0% Balance Transfer APR. After the introductory period ends, your regular Purchase APR of 18% would kick in.

**Real-Life Examples**

To illustrate the difference, consider the following scenarios:

* John wants to use his Chase Sapphire Preferred Card for business expenses, but he’s not sure about the balance transfer. He applies for the card with a 20-month 0% Balance Transfer APR and charges $1,000 worth of business purchases before the introductory period ends.
+ During the 12 months (i.e., 120 days), John won’t pay interest on the balance transfer amount.
* Emily uses her Discover it Cash Back Card for everyday purchases. She earns a 5% cashback bonus every quarter and pays off her balance in full each month.
+ If she has a $2,000 balance and charges $500 worth of purchases before the introductory period ends, her regular