What is a penalty APR?

A penalty APR (Annual Percentage Rate) is a higher interest rate that credit card companies may charge customers if they fail to make payments on time or if they engage in activities such as using their cards to make unauthorized charges or fraud. Penalty APR rates can be significantly higher than the normal APR and can last a long time, sometimes up to seven years. In the state of Maryland, penalty APRs must be clearly explained to the credit cardholder before they are charged. When the customer is informed of the penalty APR rate, the customer has the right to dispute the rate by using Maryland’s “right to dispute” regulations. In some cases, the penalty APR can be removed if the customer works with their credit card company to develop a payment plan that is suitable to both parties. If the customer is unable to develop a payment plan with their credit card company, the credit card company may refer the customer to a credit counseling organization, which can assist the customer in developing a plan to pay off their debt. In Maryland, credit card companies are not allowed to raise the penalty APR unless the customer has failed to make payments for at least sixty days or has participated in activities that would place them in violation of the Maryland Credit Card Law. Additionally, the penalty APR cannot be increased more than three times and it must be fixed for at least ninety days.

Related FAQs

What are the benefits of having a credit card?
What are the different types of interchange fees?
What are the consequences of not paying my credit card bill on time?
What is a credit limit?
How do I earn rewards with my credit card?
What should I do if I spot an error on my credit report?
How do I choose the best credit card for my needs?
What are the different kinds of interest rates for credit cards?
What can I do to protect myself from credit card fraud?
What is the most important information to know about a credit card?

What is a penalty APR?

Related FAQs

Related Blog Posts