💳APR Calculator
Calculate the true Annual Percentage Rate (APR) including all fees and costs. Compare nominal rates to effective rates and understand your real borrowing costs.
Frequently Asked Questions
What is the difference between APR and interest rate?
Interest rate is the cost of borrowing the principal amount, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate PLUS additional fees and costs like origination fees, annual fees, and closing costs. For example, a credit card with an 18% interest rate and $95 annual fee might have an APR of 19.5%. APR gives you the true cost of borrowing. By law, lenders must disclose APR so you can compare loans apples-to-apples. Always compare APRs, not just interest rates, when shopping for credit.
What is APY and how does it differ from APR?
APY (Annual Percentage Yield) accounts for compound interest, while APR does not. APY shows what you'll actually earn or pay with compounding. For example, an 18% APR compounded daily becomes 19.72% APY. The formula: APY = (1 + APR/n)^n - 1, where n = compounding periods. APY is higher than APR because interest compounds on interest. Credit cards typically compound daily, so APY is significantly higher than stated APR. When saving, you want higher APY; when borrowing, you want lower APR. Banks must show APY on savings accounts and APR on loans.
How do credit card fees affect the APR?
Credit card fees significantly increase your effective APR. Common fees: Annual fee ($0-$550), late payment fee ($30-$40), balance transfer fee (3-5%), cash advance fee (3-5%), foreign transaction fee (1-3%), over-limit fee ($25-$35). These fees compound the cost of borrowing. Example: $5,000 balance at 18% APR with $95 annual fee and 2 late payments ($40 each) = effective APR of 21.5%. Some cards have no annual fee or late fees (e.g., Citi Simplicity). Read the Schumer Box (fee disclosure table) before applying for any credit card.
What is a good APR for a credit card?
Good credit card APRs vary by credit score: Excellent credit (750+): 15-18% APR. Good credit (700-749): 18-21% APR. Fair credit (650-699): 21-25% APR. Poor credit (below 650): 25-30%+ APR. The average credit card APR is around 20-24%. Balance transfer cards offer 0% APR for 12-21 months (then 18-25%). Rewards cards typically have higher APRs (20-25%). Secured cards for bad credit: 20-30%. Best strategy: Pay in full monthly to avoid interest entirely. If you carry a balance, focus on low APR cards, not rewards. Even 0.1% APR difference saves money on large balances.
How can I lower my credit card APR?
Six ways to lower your APR: (1) Call and ask - many issuers reduce APR for good customers (success rate ~50%). (2) Improve credit score - pay on time for 6-12 months, then request a review. (3) Transfer to 0% APR balance transfer card - save 12-21 months of interest. (4) Negotiate based on competitor offers - mention lower rates you've been offered. (5) Pay off debt and close card - removes high-APR temptation. (6) Federal credit union credit cards - often have APR caps at 18%. Average APR reduction from a simple phone call: 2-6 percentage points. If denied, ask when you can request again (usually 6 months). Never close cards before opening new ones (hurts credit score).
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Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.