What is a penalty interest rate on a credit card?

A penalty interest rate (sometimes called a default rate) is the rate you will be charged if you fail to make timely payments on your credit card balance in Texas. The penalty rate is typically much higher than the standard rate that you would be charged under normal circumstances. The exact penalty rate may vary from one credit card company to another, but it is often as much as several percentage points higher than the standard rate. The penalty rate is designed to encourage responsible credit card use, by providing an incentive to make timely payments. Credit cardholders who do not make their payments on time may find their situation greatly worsened by having to pay a higher interest rate. The penalty rate will usually remain in effect until the balance is paid in full. Credit card holders should always do their best to make timely payments on their credit card balance. Not only will this help to keep their account in good standing, but it will also help to avoid costly penalty interest rates. Being aware of the penalty interest rate that could be imposed for not paying on time is an important step to ensure that you remain responsible with your credit card use.

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What is a penalty interest rate on a credit card?

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