What Is APR (Annual Percentage Rate)?
Definition
The yearly interest rate charged on borrowed money (loans, credit cards) or earned on savings. Includes fees and other costs.
Example: "A credit card with 22% APR means you would pay about $220 per year in interest on a $1,000 balance."
Why It Matters
APR is the number you should always look at first when comparing loans or credit cards. It includes not just the base interest rate but also lender fees, so it gives you a truer picture of what borrowing actually costs. A lower APR saves you real money over the life of a loan. For credit cards, if you carry a balance from month to month, the APR determines how much extra you pay. If you pay your credit card in full every month, APR matters less because you won't be charged interest at all.
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