What is APR?

What is APR?

APR stands for annual percentage rate and includes any compulsory fees or charges added to a loan or credit product.

This makes it easy to compare as it shows the total cost of borrowing over a year.
This means you can compare different products e.g credit card vs a loan.

Its not always a total measure as it is based on scenarios. E.g the APR for credit cards is based on £1000.

Representative vs Real APR

When a company quotes a representative APR you are not guaranteed to get that rate. That is the rate that has been offered to 51% of people and you might just be amongst the 49%.


If you skip or fail to make payments on your credit products such as your credit card. The amount of APR might increase in a process called compounding. This is where interest is charged on capital owed plus any interest and charges from previous months. This can put you in debt.

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