What is a penalty APR?

A penalty APR is a higher rate an issuer can apply after a serious delinquency — and unlike most rate increases, it can apply to the balance you already carry. It is the most expensive consequence of a late payment, and it is escapable.

What triggers it

Typically a payment more than 60 days late, though the specific triggers are set out in your cardholder agreement and can include a returned payment or breaching the terms in other ways. It is not the consequence of being a few days late — that is a late fee. The penalty rate belongs to a more serious category of delinquency.

Why it costs more than it looks

Most rate increases apply only to new purchases; your existing balance keeps its old rate. A penalty APR triggered by a payment more than 60 days late can be applied to the balance you already owe. On a large carried balance, that repricing dwarfs any late fee — and the payoff calculators here will show you the difference between the two rates in months and dollars.

The six-month rule that gets it removed

Where a penalty rate has been applied to an existing balance after a payment more than 60 days late, the issuer must review the account and restore the prior rate on that balance if you make six consecutive on-time minimum payments. That is a real, specific escape route rather than an appeal to goodwill — six months of not missing, and the old rate returns to the old balance.

Asking, before the six months

Issuers have discretion, and a call explaining what happened on an otherwise good account is sometimes enough. It costs a phone call. But the six-payment path is the one that does not depend on anybody's mood, so set up autopay for at least the minimum and let the clock run regardless of how the conversation goes.

What it does to your payoff plan

If a penalty rate has been applied, the numbers in any plan you built are now wrong — the payoff date has moved and the interest total has risen. Re-run the plan with the new rate to see the real position. That is unpleasant reading, and it is also the argument for the six-payment run: a specific date on which the arithmetic improves again.

This page explains the mechanism. The arithmetic is one click away.

Open the Credit Card Payoff calculator →

Frequently asked questions

What triggers a penalty APR?

Most commonly a payment more than 60 days late; agreements may also list returned payments or other breaches. Your cardholder agreement is the definitive list, and the rate itself is disclosed there alongside what triggers it.

Can a penalty APR apply to my existing balance?

Yes, where the trigger is a payment more than 60 days late — which is what distinguishes it from an ordinary rate increase that applies only to new purchases. That is why it is the most expensive consequence of falling seriously behind.

How do I get a penalty APR removed?

Where it was applied to an existing balance after a 60-day-late payment, six consecutive on-time minimum payments require the issuer to review and restore the prior rate on that balance. You can also simply ask — issuers have discretion — but the six-payment route does not depend on discretion.

Does a penalty APR show on my credit report?

The rate itself does not; the delinquency that triggered it does, and that is the part with lasting effect. A payment reported 60 days late is a significant entry that can persist for years, entirely separately from what happens to your interest rate.

Should I stop using the card?

While a penalty rate is in force, new purchases are being charged at that rate with no grace period if you are carrying a balance. Putting new spending elsewhere and directing everything you can at the repriced balance is the arithmetic-driven answer, whatever else is going on.

Official sources

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