Missing credit card payments can not only hurt your credit scores and cost you money in late fees, but also result in steeper interest charges because of a penalty APR — a higher rate slapped on your card balance when you violate the terms of your credit agreement.
Some credit cards don’t charge penalty APRs, but many popular ones do. They could hike the interest rate if you’re two months late on payments. And the higher rate could last until you pay on time for six months straight.
The best solution when you incur a penalty APR — also called a default rate — is to bring your credit card account current as soon as possible by paying the minimum amount due. But that might be easier said than done. If you’re paying late, there’s probably a reason. Here's what to expect when you get socked with a penalty APR.
How to find the penalty APR for your card
When you apply for a credit card, the issuer must disclose the penalty APR: what the penalty rate is, what triggers it and how long it lasts once it's in effect.
That information and other essential card details can be found in a prominent chart at the top of the card’s terms and conditions called a Schumer box.
The penalty APR might be a single percentage rate or a range of rates based on your creditworthiness.
The penalty APR for many cards is 29.99%, at the time of this writing. That could be significantly higher — say, 10 percentage points or more — than what your normal interest rate is, which hurts if your balance is high.
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How penalty APRs work
If you are 60 days late on a payment, an issuer can impose the penalty APR. The reason? If you’re that late, the issuer views you as risky because you might not pay at all. The issuer must notify you 45 days before the increase takes effect. So it might take a total of 105 days after your first missed payment was due before the penalty APR begins.
The higher interest rate can apply to previous balances and new charges.
That penalty APR can stay in place for six months on existing balances after you bring the account current and continue to make timely payments. So this is no short-term punishment. Even after six months of on-time payments, the issuer might lower the interest rate on existing balances but can decide you’re a higher credit risk and choose to charge higher rates on future purchases.
If your payment is returned for some reason, like a bounced check, it can also be counted as late and eventually trigger a penalty APR. (It might also incur a returned payment fee.)
Also of note: Some credit cards offer new cardholders a 0% interest rate on purchases, balance transfers or both. But if the card also has a penalty APR and you trigger it, you will probably lose that promotional 0% rate.
🤓 Nerdy Tip
Federal consumer protections that limit penalty APRs don’t apply to small-business credit cards. That means issuers can be more punitive, such as applying penalty APRs sooner than 60 days after not making payments. Not all credit cards charge a penalty APR
Some credit card issuers charge penalty APRs on all or most of their cards, while others don’t use them at all. Some have a mix, with some cards having a penalty APRs and others not.
For example, when we initially examined this topic in 2021, we found lots of penalty APRs on Citi and Bank of America® credit cards, while finding few or none on Discover and Capital One cards. Chase and American Express had a mix; it depended on the card.
So it pays to check the account agreement to see if your card charges one.
A card with a penalty APR isn't necessarily a bad choice. But when comparing credit cards, maybe penalty APR becomes a tie-breaker between similar ones. For example, among flat-rate cash-back cards, maybe it’s the reason you choose the Wells Fargo Active Cash® Card, which had no penalty APR when we checked in September 2025, over the Citi Double Cash® Card, which had one.
Penalty APR is relevant only if you’re ever 60 days late. It’s not an issue if you always pay on time.
Penalty APRs are different from late fees
Late fees are a dollar amount, not a percentage. They can kick in right after a payment is late.
The bad news is you can be charged both a late fee and a penalty APR. So missing payments can be very expensive in the short term and for months to come.
Will a penalty APR hurt my credit?
A penalty APR doesn’t directly hurt your credit scores. But the same factor that triggered the penalty APR also dings credit scores.
That’s because a history of on-time payments is a big part of credit-scoring formulas. For example, payment history accounts for 35% of a FICO credit score and 40% in VantageScore's 3.0 model.
Issuers can report late payments to the credit bureaus if they are at least 30 days late. So if you got hit with a penalty APR, there’s a good chance the credit bureau reports will reflect the late payments.
What to do if you’re paying a penalty APR
There’s no magic solution for dealing with a penalty APR. Here are a few ideas:
- Stop using the card. Balances you add to the card will carry the high penalty APR.
- Pay off the credit card balance. The penalty APR won't apply to anything if you also stop using the card.
- Bring the account current. Pay at least the minimum due on time. That starts the clock on your six-month stint in the interest-rate penalty box.
- Call and plead your case. If you had a spotless payment record with the issuer previously, it couldn’t hurt to call the number on the back of the card, explain your situation and how you plan to make timely payments going forward. You can ask for a reduced APR (though there's no guarantee you'll be granted one).
- Call and explain. If your payment wasn't received because of some kind of mistake, contact your card issuer to work it out.
- Get a good balance-transfer credit card. Move your balance to a new card that features an interest-free promotional period. Drawbacks: Most cards charge a balance-transfer fee of 3% to 5%. And if your credit has been damaged by late payments, you might not qualify for a new card.
- Create a better system. If the problem is forgetfulness or sloppy bill-paying, consider putting your credit card account on autopay. Your account will be paid automatically from a bank account. Just be sure the account that autopay draws on always has enough money in it.
- Set up reminders. Many credit card issuers offer the option to send a notification text message or e-mail when your bill is due.
