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periodic rate


Definition: The periodic rate is the APR in relation to a period of time, i.e. monthly periodic rate is the monthly interest rate calculated as the APR divided by 12. So, if your APR is 12%, then your monthly periodic rate is 1%.

When credit card issuers calculate your finance charges, they often use your periodic rate rather than than your APR since finance charges aren't calculated annually. With credit cards, the periodic rate is based on the number of days in the billing cycle. If there are 29 days in your billing cycle and your APR is 12%, your periodic rate would be .95% ((12% / 365) X 29).

Also Known As: periodic APR

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