69% Brits don’t know what APR means – and why it matters

69% Brits don’t know what APR means – and why it matters

author: Sarah Neate

By Sarah Neate

Over two-thirds of people don’t know what an Annual Percentage Rate (APR) is, why credit card or loan providers display it and how it should be used, despite it being an important factor when comparing interest rates, according to a new financial survey.


A whopping 69% of people don’t know what an Annual Percentage Rate (APR) is, why credit card or loan providers display it and how it should be used, despite it being an important factor when comparing interest rates, according to a new financial survey.

Among 18- to 24-year-olds, the figure is even higher, with 87.5% of people unable to identify what the APR means. And the 35 to 44 age group does not fare much better, with more than three-quarters (77%) of people unable to define what APR means.

The two most common mistaken definitions of APR were that it is the interest rate without any fees or costs added or that it is the amount that a lender is allowed to charge.

The survey by KIS Finance also revealed that 68% of credit card holders and 66% of mortgage holders could not identify what the APR was.

In an earlier survey carried out by the independent financial broker in November 2020, 15% of people have had to take out an additional credit card, and 25% have had to go into an arranged or unarranged overdraft solely because of the pandemic. 

What is APR? What does this mean to me?

  • The APR is the percentage a lender will charge you for borrowing money over one year, taking into account interest charges plus any fees for setting up the loan. 
  • For credit cards, the APR will only kick in and interest will be charged if you don’t repay the full balance each month – if you can afford to do this, there will be no interest to pay.

In advertising, lenders show a ‘representative’ APR because they can't provide an exact figure until they know the borrower’s financial circumstances. You will find out your own APR offered during the application. To ensure the figure shown is fair, at least 51% of accepted customers have to receive that figure (or lower), but it does mean the other 49% may get a higher rate.

Read more about APR to find out all you need to know or see how you can get a lower APR.

Disclaimer: All information and links are correct at the time of publishing.

author: Sarah Neate

By Sarah Neate

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69% Brits don’t know what APR means – and why it matters 69% Brits don’t know what APR means – and why it matters