Do you have to pay APR if you pay on time?

You don’t have to pay interest if you pay your credit card bill in full and on time every month, as the APR only applies to outstanding balances carried from one billing period to the next. Most cards have a grace period, so interest won't apply between when your monthly statement is generated and when your bill is due.

To take advantage of a grace period, you need to pay in full every single billing cycle. If you don’t do that one month, you’ll lose your grace period. As a result, your charges will start accruing interest right away. You’ll have to pay in full for two consecutive billing cycles to get it back.

Note that paying just the minimum amount required on time won’t get you out of paying interest on its own. You’ll just avoid paying late fees and hurting your credit score. You have to pay in full if you don’t want to pay interest at all.

How to Avoid Paying APR on Your Credit Card

Pay on time and in full

If you pay your bill in full by the due date every month, you won’t pay any interest, thanks to the grace period most credit cards have.

Don’t lose your grace period 

A credit card’s grace period typically is the time between the end of the billing cycle and the due date. If you lose your grace period by carrying a balance past your due date, you can get it back by paying your bill in full two months in a row.

Don’t make any balance transfers or cash advances 

These transactions don’t have grace periods, so interest will begin piling up right away. The exception is if your balance transfer has a 0% introductory rate for a certain number of months.

Get a 0% Intro APR credit card 

Getting a card like this will give you a larger window of opportunity to pay off your credit card. It allows you to pay off your balance before the end of the promotional APR period without accruing interest. You’ll still need to pay at least the minimum payment on time.

However, it’s a good idea to pay more than your minimum payment every month, as leaving a big balance on a credit card for a long time can cause a dip in your credit score. Also, any remaining balance that hasn’t been paid off by the end of the introductory 0% APR period will accrue interest at the card’s regular rate.

The simplest way to handle things is to set up automatic monthly payments for your full statement balance from a bank account. Just make sure you have enough funds in your bank account to cover the bill.