What is a penalty APR, and how do I avoid it?

A penalty APR is a sharply higher interest rate – often around 29.99% – that an issuer can impose if you miss a payment or pay late, typically by 60 days. Once triggered, it applies to your existing balance and new purchases, dramatically increasing your interest cost and slowing any payoff plan. It can also linger: issuers may keep the penalty rate in place until you make several consecutive on-time payments. The damage extends beyond the rate, since a 30-day-late payment also hurts your credit score. Avoiding it is straightforward: set up autopay for at least the minimum so a busy month never causes a missed due date, and keep a small buffer in checking. If you do slip and get hit with a penalty APR, call the issuer and ask them to remove it once you're current – they often will for an otherwise good customer. Prevention beats negotiation every time.