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Penalty Rate |
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A penalty rate is a change (an increase) in the current annual percentage rate. A penalty rate is usually triggered after a card holder has made one or more late payments. The amount of the penalty rate that will be charged is listed in the card holder agreement. The penalty rate frequently is a percentage increase of about 2 to 3%. An issuer might impose a penalty rate if a late payment is made on some other credit card, or if a consumer defaults on another loan, or if the consumer carries too high a balance. Such actions are indications the consumer has become a credit risk.
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Credit Card Definitions > N - Z > Penalty Rate
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