APR means Annual Percentage Rate. It’s the cost of borrowing money over a year on a credit card or loan. It takes into account interest, as well as other charges you may have to pay, such as an annual fee. Show
What does representative APR mean?When you’re looking at potential credit cards or loans, you may see a representative APR advertised. Given that lenders offer different interest rates
based on your individual application, representative APR is an example that allows you to compare between lenders and products quickly without having to apply. To advertise the rate as a representative APR, the lender needs to offer the rate to at least 51% of the customers who successfully apply. What does representative APR include?The representative APR includes the rate of interest. For credit cards, there can be different rates so the APR uses the rate which applies to the way the card is most commonly used. This is usually the standard purchase rate. It also takes into account other charges you'd automatically have to pay such as an annual fee or loan arrangement fee. For credit cards, representative APR is based on a credit limit of £1,200. It assumes you spend the full £1,200 on the first day and then pay it back in equal, regular instalments over a year without spending anything else. Explore: How do credit cards work?
What does a representative example look like?
What does a representative example look like?
While the purchase rate in the second example is lower than the first example, the £195 annual fee is included in the representative APR – so the representative APR rises to 59.3%. However, it's important to note that representative APR doesn't take into account the benefits you can earn from using different kinds of credit cards. What's not included?For credit cards, the representative APR assumes you only use the card for purchases. It doesn't take into account different rates and fees that might apply if you use the card in different ways, such as for balance transfers or cash withdrawals. It also doesn't include any fees or charges for things like late payments, going over your credit limit or returned payments. Only compulsory charges are included in the representative APR – so charges like payment protection insurance aren't included either. What else do you need to know?The representative APR helps you quickly compare credit cards and different types of loans. It will not necessarily match up to what a card or loan actually costs to you. That will depend on the final rate you’re
offered, how you use either the credit card or loan and how much you repay each month. Annual percentage rate (APR) is the official rate used to help you understand the cost of borrowing. It takes into account the interest rate and additional charges of a credit offer. All lenders have to tell you what their APR is before you sign a credit agreement. What kind of card do you need? Balance
transfer Purchase Balance transfer & purchase Cashback & reward Improve credit We are a credit broker, not a lender† How does APR work?APR is used for comparing credit cards and unsecured loans, and is expressed as a percentage of the amount you’ve borrowed. For example, a personal loan with a 15% APR should be cheaper than one with a 17.5% APR, although you should always check the terms and conditions. It’s worth noting that APR only includes compulsory charges. Some fees, such as payment protection, may not be taken into account, so you should always read the terms and conditions carefully before applying for credit. APR also doesn’t cover any fines for being late with payments or going over your credit limit. Real ratesAlso, did you know that credit card providers only actually have to give their advertised APR to 51% of customers that apply? That means that people can sometimes be surprised by the final rate they end up being offered. But if you compare credit cards with Experian, we will show you the rates you’re guaranteed to get, so there are no nasty surprises. Just remember, we’re a credit broker, not a lender†. Can APR help me calculate how much I’ll pay?Calculating how much you’ll pay in pounds per year can get a little complicated, especially when it comes to credit cards. This is because credit cards have flexible repayments (i.e. you can pay back more one month than another, provided you pay at least the minimum amount), and your provider will usually calculate interest on a monthly or daily basis. So, the amount of interest you pay annually depends on how your balance fluctuates over the year. For example, if you repay your credit card balance in full and on time every month, you won’t pay any interest at all – no matter what your APR is. So, APR can be a good way to compare credit cards, but remember that what you actually pay in interest depends on how and when you pay your debt off. What are the differences between representative and personal APR?Representative APRThe representative APR is an advertised rate that at least 51% of those accepted for the credit deal will get. That means that almost half the people who are approved for the deal may not be eligible for the advertised rate, and have to pay more. Personal APRA personal APR is the rate you’re actually given - this could be the same as the representative rate, or it could be higher, depending on your eligibility. The lender will usually decide what rate to offer you based on how your credit and financial information matches their criteria. What is a good APR?As a general rule, with a loan, the more you borrow, the lower the APR is likely to be. With credit cards, rates often vary from around 5% to over 30% - the rate you’re offered usually depends on how high your credit score is. It’s worth noting that these rates are usually based on rates for making purchases (e.g. online or instore). Rates for other transactions, such as cash withdrawals, may be different. Finally, 0% purchase and balance transfer credit cards often have a 0% APR for a promotional period, which typically lasts for anything between three to 40 months. It’s important to stick to the terms and make all payments on time and in full, or you may lose the promotional rate early. Also, it’s best to try and pay off the card before this period ends, or you’ll usually be moved on to a standard variable rate. A good credit score can help you get the rate you’re looking for – you can get a good idea of your chances of getting the best deals by checking your free Experian Credit Score. You can also see your eligibility for specific credit cards and loans when you compare them with Experian. Just remember, we’re a credit broker, not a lender†. What is APRC?APRC stands for annual percentage rate of charge. It’s the same as an APR but it's the term used when comparing mortgages and secured loans. When you apply for a mortgage, you usually either get approved for it or you don’t – unlike credit cards and unsecured loans, you’re unlikely to be offered a different APRC on the same deal according to your credit score. A mortgage APRC indicates the overall cost of borrowing across the whole term of the mortgage, provided the interest rate doesn’t change. But more often than not, the rate will change – either because you have a variable or tracker rate, or because you decide to remortgage. If you’re searching for good mortgage deal, it can often help to compare mortgages or use a mortgage broker. You can also see where you stand with lenders by checking your free Experian Credit Score. Featured articlesMortgage interest ratesRead What is 24% APR on a credit card?A 24% APR on a credit card is another way of saying that the interest you're charged over 12 months is equal to roughly 24% of your balance. For example, if the APR is 24% and you carry a $1,000 balance for a year, you would owe around $236.71 in interest by the end of that year.
Is 24% APR high for a credit card?You still shouldn't settle for a rate this high if you can help it, though. A 24.99% APR is reasonable but not ideal for credit cards. The average APR on a credit card is 20.16%. A 24.99% APR is decent for personal loans.
What does 20% APR stand for?APR, which stands for annual percentage rate, is the yearly cost of borrowing money. If you borrow $1,000 for a year at a 20% APR, the total to pay back would be $1,200.
What is a good percentage of APR?A credit card APR below 10% is definitely good, but you may have to go to a local bank or credit union to find it. The Federal Reserve tracks credit card interest rates, and an APR below the average would also be considered good.
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What does annual percentage rate mean for credit cards
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