Annual Percentage Rate (APR)
What is Annual Percentage Rate?
The yearly cost of borrowing, including interest and certain fees, as a percentage.
Understanding Annual Percentage Rate
APR lets you compare loans on a like-for-like basis because it includes many fees as well as the interest rate. In the U.S., lenders must disclose it under the Truth in Lending Act.
For credit cards, the APR is usually variable and tied to the prime rate. APR does not reflect compounding within the year; APY does.