What is an APR?
The Federal Truth-in-Lending law requires that all financial institutions disclose the APR (Annual Percentage Rate) when they advertise a rate. The APR is designed to present the actual cost of obtaining financing, by requiring that some, but not all, closing fees are included in the APR calculation. These fees in addition to the interest rate determine the estimated cost of financing over the full term of the loan.
An APR, or Annual Percentage Rate, is the cost of credit expressed as an annual rate. In other words, this rate includes a combination of the interest rate, points and other fees paid to a lender when acquiring a mortgage. The APR is the most meaningful measure for comparing the cost of mortgage loans offered by different lenders.
Your APR, or annual percentage rate, is the yearly interest rate you will pay if you carry a balance on your credit card. This also applies if you transfer your balance from another card or take out a cash advance. One credit card may have a few different APRs. There may be one percentage rate for purchases, a different rate for balance transfers, and another for cash advances. The annual percentage rates for balance transfers and cash advances are often higher than the APR for purchases. Your APR can change over time. If you have a “fixed rate” APR, it will change less frequently, and the credit card company must notify you before it increases. If you have a “variable rate” credit card, the APR will change from time to time, usually depending on the prime rate or the Treasury Bill rate. Also, many credit card offers advertise an introductory APR, or they may even offer no interest whatsoever for the first few months. Keep in mind that this introductory APR will generally go up after t
