What is APR?

APR stands for Annual Percentage Rate. It’s the total cost of borrowing on a credit card, unsecured loan or hire purchase agreement - over the course of a year. APR includes both interest and any compulsory charges.

3 min read
man looking at credit card

How does APR work? 

Knowing the APR of a product makes shopping around for a credit card or loan easier. 

APR is expressed as a percentage, so you can quickly compare the cost of borrowing between different products and lenders. 

The lower it is, the less you’ll have to pay in interest and compulsory charges. Bear in mind, the exact amount of interest you end up paying over the course of a year depends on: 

  • your credit card balance
  • how much you pay off each month. 

For example, you won’t be charged any interest at all if you pay your balance in full and on time, every time – no matter your APR. 

What isn’t included in APR? 

Not all charges and fees will be included in the APR – only compulsory ones. For example, late or missed payment fees won’t be included, as they only apply if you miss a payment.  

You could also be charged extra if you make cash withdrawals or go over your credit limit. So, it’s best to check the terms and conditions before you apply. 

What affects APR? 

Each lender uses its own criteria, but generally, the APR lenders offer you is affected by your individual circumstances and your credit history. If you’ve managed your money well in the past, you should come across as low risk to lenders. As a result, you’re more likely to be approved for a credit card with a competitive APR.  

What does ‘Representative APR’ mean? 

Representative APR relates to the advertised percentage rate. It gives you an example of the cost of borrowing. To be able to advertise the rate, the lender must give the representative APR to at least 51% of accepted customers.  

This means up to 49% of accepted customers could be charged a higher rate than advertised. The rate you end up paying will depend on your individual circumstances.  

What is the difference between APR and APRC? 

APRC stands for Annual Percentage Rate of Charge. APRC relates to the total cost of borrowing on a secured loan or mortgage. (Whereas APR relates to a credit card, personal loan, or hire purchase agreement). 

How can you find out your eligibility for a credit card? 

You can find out if you’re eligible for a credit card using an eligibility checker. This tool will show you the likelihood of being accepted, before you apply. Unlike a formal credit application, an eligibility checker won't leave a footprint on your credit report. So, you can use it to shop around and it won't impact your credit score. 

Making multiple credit applications in a short space of time can give lenders the impression that you’re desperate to borrow – which may put them off. An eligibility checker can avoid this from happening and reduce the risk of rejection. 

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39.9% APR
Representative (variable)

Intelligent Lending Ltd (credit broker). Capital One is the exclusive lender