APR (Annual Percentage Rate)

APR (Annual Percentage Rate) is the annualized Interest Rate that reflects the cost of borrowing or the return on an investment, expressed as a percentage. It includes not only the Interest Rate but also any fees or additional costs associated with the loan or investment, providing a more comprehensive view of the total cost.

For example:

• If you borrow $1,000 with an Interest Rate of 5% and pay a $50 fee, the APR would be calculated as follows: the total cost is $1,050, and the APR would be approximately 5.25% over one year.
• If a Credit card has a 20% Interest Rate and charges an annual fee of $100, and you carry a balance of $500, the APR would be higher than 20%, taking the fee into account.

APR is commonly used in various financial products, such as:

• Mortgages: A mortgage might have an APR of 4.5%, which includes the interest and any upfront fees.
• Personal loans: A personal loan may offer an APR of 12%, indicating the cost of borrowing over a year.
• Credit cards: A Credit card may advertise an APR of 18%, reflecting the annual cost of borrowing on the balance.