When comparing credit cards or reviewing your credit card statement, chances are you’ve seen the term “periodic rate.”  The periodic rate is the percentage that you’ll be paying for the purchases you’ve made, based on the APR.  The acronym “APR” stands for Annual Percentage Rate but because credit cards are billed monthly, they must divide the “annual” rate by 12 (for the number of months in the annual billing cycle), to determine the monthly rate.  If your card carries an APR of 14%, for example, your monthly periodic rate or the rate you’ll pay on purchases made that month will be 14 divided by 12 or 1.17%.  These days most cards offer variable rates rather than fixed interest, which means that the rate you pay will fluctuate based on an index such as prime or the federal funds rate among others. When the index varies either up or down, so will the rate you pay.

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