Question 1

What’s the definition of APR?

Accepted Answer

The annual percentage rate is what your lender charges you to borrow money on a yearly basis. It includes both your interest rate and any fees the lender tacks on. Put another way, APR is the annual “price” of borrowing money.

Question 2

How Do You Calculate APR?

Accepted Answer

APR = [((fees + interest) /loan principal) / number of days in loan term] X 365 X 100

Question 3

What’s a good APR?

Accepted Answer

There’s no clear answer to this question. The interest rate you’re charged is usually dependent on your credit scores, the economy, the type of loan or credit card in question, and several other factors. An APR might be considered “good” in one situation but extremely high or low in another.

Question 4

What’s the difference between interest and APR?

Accepted Answer

When it comes to loans (particularly mortgages) “interest” refers specifically to interest charges, and that’s it. APR, which stands for annual percentage rate, encompasses the cost of the loan as a whole, including interest and costs like a broker’s fees.

Question 5

Can you avoid APR charges?

Accepted Answer

Yes, you can avoid interest! With credit cards, at least. That’s thanks to a nifty feature called the grace period, which is basically a stretch of time after your statement is generated, and before your payment due date, during which you won’t accumulate interest charges.

Question 6

What is my credit card’s APR?

Accepted Answer

You should have received your card’s terms by mail upon approval. Those terms should include something known as a Schumer Box, which should clearly detail your card’s APRs, plus any relevant fees. Other ways to check your card’s APR (plus related information) include logging in to your credit card account online, or by using the issuer’s mobile app.

Interest & Fees

What Is APR? Your 6-Minute Guide to Annual Percentage Rates

What Is a Cash Advance? A Definition and Why You Should Avoid Them

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