Annual percentage rate
The terms annual percentage rate (APR), nominal APR, and effective APR (EAR)[1] describe the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage, credit card, etc. Those terms have formal, legal definitions in some countries or legal jurisdictions, but in general: [1] The nominal APR is calculated as: the rate, for a payment period, multiplied by the number of payment periods in a year.[1] However, the exact legal definition of “effective APR”, or EAR in short, can vary greatly in each jurisdiction, depending on the type of fees included, such as participation fees, loan origination fees, monthly service charges, or late fees. The effective APR has been called the “mathematically-true” interest rate for each year.
