The Credit Card APR can be a source of much confusion. It’s funny, a financial tool that is partly about making spending money easy should be so confusing. Even more funny, the very companies that should be explaining this stuff seem to want to keep the mystery going. So here it is, the APR in a nutshell!
APR stands for Annual Percentage Rate
This is a figure written as a percentage, like 9% APR, that is intended to make it easy to compare card rates and loans. You would normally expect with credit cards for the APR to be your monthly interest rate multiplied by 12, or thereabouts.
The problem is this isn’t always the most helpful way of looking at your actual payments so you often need more information to go on.
What charges will there be? Will the APR change after an introductory period? Are there different fees for cash withdrawals and balance transfers, and so on.
The interest rate you see advertised could be based on monthly, annual, advance payments, could include certain other fees. APRs help to clear this up and put cards on an equal playing field, but … basically, still read the small print!
If you want to read in more detail, check out the Wikipedia page