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How is the Annual Percentage Rate (APR) calculated?

April 26, 2017Annual Percentage Rate Apr calculated

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How is the Annual Percentage Rate (APR) calculated?

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As of January 10, 2005, the APR is determined in the following manner: • The APR is the greater of 2.5% or an average APR based on monthly average dealer rates published by the Federal Reserve on negotiable 6-month CDs nationally traded in the secondary market. Note: Because the time is calculated in days, the APR is divided by the number of days in the year (365) in the simple interest formula. No adjustment is made for leap years.