What is a penalty APR?

A penalty APR, or penalty Annual Percentage Rate, is a feature of credit card law in Washington and other states. It is the rate of interest charged when a borrower misses payments or breaks the terms of their credit card agreement. Penalty APRs are much higher than the normal interest rate, often reaching as high as 29.99%. Penalty APRs are meant to be a punitive measure to help ensure that borrowers are held accountable for their missed payments or other credit card agreement violations. Penalty APRs can cause borrowers a great deal of financial hardship, so it is important that they are aware of the terms and conditions of their credit card agreement to ensure they do not have to pay a penalty APR. Additionally, it is important that borrowers understand the interest rates associated with their credit card and try to pay off the balance in full each month. Doing so will help borrowers avoid the high penalty APR, which can significantly impact their finances.

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