What is a penalty APR?

A penalty APR (annual percentage rate) is an interest rate charged on a credit card when the cardholder has violated the terms of their credit card agreement. This type of rate is often much higher than the original interest rate on the credit card. In the state of Oregon, penalty APRs are capped at 23%, meaning any APR amount higher than 23% would be a violation of state law. Penalty APRs are used to punish cardholders for failing to make payments on time, using their credit card beyond their credit limit, or any other breach of the terms of their agreement. In Oregon, the penalty APR will stay in effect until the cardholder brings their account into good standing, which means that they pay at least the minimum payment on time for six consecutive months. During this time, the cardholder will likely be charged a much higher rate than what was originally agreed upon. It’s important to note that penalty APRs are not the same as late fees. Late fees are typically much smaller than penalty APRs and are a one-time cost. Penalty APRs, on the other hand, can cause a person’s debt to accumulate at a much faster rate and can put the cardholder in further financial distress. Therefore, it is important for cardholders in Oregon to be aware of the credit card law and to understand the potential penalties for not adhering to it.

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What is a penalty APR?

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