How APR works
For a loan, the APR combines the interest rate with mandatory fees (like origination or certain closing costs), so a loan with a 7% rate plus fees might carry a 7.4% APR. That is why lenders must disclose APR — it stops a low “rate” from hiding expensive fees.
For a credit card, APR is essentially the interest rate on balances you carry, divided by 12 for the monthly rate. Cards quote APR (not APY), and you only pay it if you do not pay the balance in full.
What is a good APR?
It depends on the product and your credit. The single biggest factor is your credit score — better credit unlocks lower APRs. The reliable move is to get quotes from more than one lender and compare by APR, not the headline rate.
Why it matters
APR is the cost lever on every loan and card — it drives your real payment and total interest.
See APR in action
See your monthly payment and total interest at a given APR.