Personal Finance

APR (Annual Percentage Rate)

The yearly cost of borrowing money, including interest and fees.

APR is the true price tag on debt. The higher the APR, the more a loan or credit-card balance costs you. Credit-card APRs are often 20% or more, which is why carrying a balance is so damaging. When you borrow, the APR (not the monthly payment) is what really matters.

For example

A $4,000 credit-card balance at 22% APR costs about $880 a year in interest if you only pay the minimum.

Related terms

Credit Score

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