APR (annual percentage rate)

APR (annual percentage rate) is the yearly cost of borrowing as a percentage: on a credit card, the interest rate on balances you carry; on a loan, the interest rate plus certain fees.

Lenders must disclose APR under the Truth in Lending Act and Regulation Z, so it is the standard figure for comparing credit. A card can have several: a purchase APR, a balance transfer APR, a cash advance APR and a penalty APR.

Card issuers charge interest daily: the daily periodic rate is the APR divided by 365, applied to your average daily balance. If you pay the statement balance in full by the due date, the grace period means no interest on purchases.

For loans, APR adds prepaid finance charges such as origination fees to the interest rate, so a loan with fees has an APR above its note rate.

Sources: CFPB: Regulation Z, 12 CFR 1026.14 · CFPB: Regulation Z, 12 CFR 1026.22