 TITLE: What Is a Penalty APR? CONTENT: How a Penalty APR Works\n-----------------------\nCredit cards have an APR for purchases, balances transfers and cash advances. Rates can either be variable and rise or fall based on Federal Reserve rates, or fixed. The rates you receive can also vary depending on the card and your creditworthiness—having good credit can help you get a lower APR.\nA penalty APR is a rate that can be triggered when you don't pay your bill on time. It can be applied in the following ways:\n*   A penalty APR that's higher than your card's regular rate can be charged on future transactions if you don't make your minimum payment by the due date.\n*   Missing your payment by even one day could also lead to losing promotional interest rates, such as an introductory 0% APR.\n*   Once you're 60 days past due, the card issuer can apply the penalty APR to existing balances on your card.\nThere are, however, some strict limitations on when credit card companies can increase your card's APR, according to the Credit CARD Act of 2009:\n*   Your interest rate can't increase during your first year with the card except in certain circumstances, such as when you're 60 or more days late, a promotional rate ends or you have a variable rate and the benchmark rate increases.\n*   After the first year, a card issuer can increase your APR for any reason; however, it must send you a notice first (sometimes these appear on your regular card statement). The higher rate won't take effect for 45 days, and will only apply to transactions made 14 or more days after the notice was sent.\nAdditionally, when your interest rate increases or a penalty APR is applied, the increase might not be permanent. END