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Annual Percentage Rate — the yearly cost of borrowing money, stated as a percentage. On a credit card or loan, it is what the lender charges you.
Why It Matters
APR is the number that decides how expensive a debt actually is, and it is the figure to compare when weighing one balance against another. Credit cards typically carry far higher APRs than mortgages or federal student loans, which is why the same dollar of debt can cost wildly different amounts depending on where it sits. On a credit card, APR is usually variable — it moves with the prime rate, so it can change without you doing anything.
Key Points
- The yearly cost of borrowing, shown as a percentage.
- On loans, APR includes certain fees — so it can exceed the quoted interest rate.
- Credit card APRs are usually variable and move with the prime rate.
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Common Questions
Annual Percentage Rate — the yearly cost of borrowing money, stated as a percentage. On a credit card or loan, it is what the lender charges you. APR is the number that decides how expensive a debt actually is, and it is the figure to compare when weighing one balance against another. Credit cards typically carry far higher APRs than mortgages or federal student loans, which is why the same dollar of debt can cost wildly different amounts depending on where it sits.
APR is the number that decides how expensive a debt actually is, and it is the figure to compare when weighing one balance against another. Credit cards typically carry far higher APRs than mortgages or federal student loans, which is why the same dollar of debt can cost wildly different amounts depending on where it sits. On a credit card, APR is usually variable — it moves with the prime rate, so it can change without you doing anything.
The yearly cost of borrowing, shown as a percentage.
On loans, APR includes certain fees — so it can exceed the quoted interest rate.
Credit card APRs are usually variable and move with the prime rate.