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We're the Consumer Financial Protection Bureau (CFPB), a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.

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My bill shows different APRs and shows how much of the balance is subject to each interest rate. I cannot figure out how this is calculated. How does that work?

Answer:

Often card issuers charge one interest rate for purchases and different interest rates if you use your credit card to get cash, to write a check using your credit card account, or for other transactions. Your statement must show each category with a different APR and the amount of the balance that falls in each category. 

Your cardholder agreement should include the rules your card issuer applies to determine which transactions and fees fall into which categories, and list the different interest rates.

When you pay more than the minimum required, the card issuer must generally apply the amount you pay over the minimum to the balance with the highest interest rate. It is generally up to the card issuer to decide to which balance it will apply the minimum amount portion of your total payment.

You should be able to find a copy of the cardholder agreement on your card issuer's website, and you can request a copy from your card issuer if it is not there. If you have any questions, you should contact your card issuer.

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