APR (Annual Percentage Rate).

In plain English

APR stands for Annual Percentage Rate. It's the cost of borrowing money for a year, including most fees. On a credit card, it's the interest rate that applies to any balance you carry. On a loan, it includes the interest rate plus most upfront fees, which is why APR is usually slightly higher than the advertised interest rate.

01Why it matters

APR is the single number that tells you how expensive debt is. A credit card with a 24% APR is more than 8x as expensive as a car loan at 7%. Comparing APRs is the only fair way to compare loans.

02The math, step by step

You carry a $3,000 credit card balance at 24% APR for one year, paying only the minimum. You'll pay roughly $720 in interest over the year, so you really paid $3,720 for whatever you bought. The same $3,000 on a personal loan at 10% APR for one year costs about $300 in interest. Same money. Different APR. $420 difference.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.