💳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).
Why Use This Calculator?
Nominal vs Effective APR Understanding
24% nominal APR with daily compounding = 27.1% effective APR. Actual cost higher than stated rate due to compound interest. $10k loan: 24% simple = $2,400 interest, 27.1% effective = $2,710. Understanding true cost prevents underestimating debt burden.
Annual Fee Impact on True Cost
$95 annual fee on $5k average balance = effective 1.9% rate increase (24% becomes 25.9%). Fees compound over time - 5 years = $475 extra cost. Calculator shows true cost including all fees, not just stated APR.
Balance Transfer APR Comparison
Current card 24% APR on $10k = $2,400/year interest. Transfer to 0% for 18 months with 3% fee ($300) = $300 total vs $3,600 at 24% (18 months). Calculator shows break-even point - transfer saves $3,300 in this example.
Cash Advance APR Premium Cost
Purchase APR 20%, cash advance APR 27% + $10 fee. $1,000 cash advance = $270 annual interest vs $200 for purchases. Plus instant interest (no grace period). Cash advance costs 35-40% more than purchases - avoid unless emergency.
Intro APR Expiration Planning
0% APR for 12 months, then 24.99%. $6k balance: Pay $500/month during promo = paid off, $0 interest. Pay minimums = $4k remaining, jumps to 24.99% ($1,000/year interest). Calculator projects costs post-promo expiration.
Variable APR Risk Assessment
Variable APR tied to Prime Rate (currently 8.5%). Card at Prime + 16% = 24.5% today. If Prime rises 2% = 26.5% APR. On $10k balance: $200/year extra interest. Calculator models rate change impact on total cost.
Step-by-Step Guide
Locate Your Current APR
Find APR on credit card statement under "Interest Charges" or "Account Summary". May show multiple APRs: Purchase APR (18-24%), Balance Transfer APR (15-24%), Cash Advance APR (25-30%), Penalty APR (29.99%). Use Purchase APR for regular purchases.
Example:
Example: Purchase APR 24.99%, Cash Advance APR 29.99%
Identify APR Type (Fixed vs Variable)
Fixed APR: Stays same unless you trigger penalty (late payment). Variable APR: Changes with Prime Rate. Variable example: "Prime + 16%" = 8.5% Prime + 16% = 24.5% today. Prime rises = your rate rises. Most cards are variable.
Example:
Example: "Variable APR 24.99% based on Prime Rate"
Include All Applicable Fees
Enter annual fee, balance transfer fee (3-5% typically), cash advance fee ($10 or 5%), late fee ($40), over-limit fee ($35). $10k transfer with 3% fee = $300 upfront. Fees add to effective APR cost significantly.
Example:
Example: $95 annual fee + 3% balance transfer fee ($300 on $10k)
Calculate Nominal APR
Nominal APR = stated rate on statement. This is advertised rate (24%, 19.99%, etc.). Does NOT include compounding effect. $10k at 24% nominal = $2,400 simple annual interest. Starting point for true cost calculation.
Example:
Example: 24% nominal APR on $10,000 = $2,400 annual interest
Determine Compounding Frequency
Credit cards compound daily (365 times/year). Some loans compound monthly (12×) or quarterly (4×). Daily compounding increases effective rate most. Formula: (1 + APR/365)^365 - 1. 24% daily compounding = 27.1% effective APR.
Example:
Example: Daily compounding (365×/year) vs Monthly (12×/year)
Calculate Effective APR (True Cost)
Formula: Effective APR = (1 + Nominal APR / Compounding Periods)^Periods - 1. Example: 24% APR daily compounding = (1 + 0.24/365)^365 - 1 = 27.1%. Effective APR = true annual cost including compounding. On $10k: $2,710 interest vs $2,400 nominal.
Example:
Example: 24% nominal = 27.1% effective with daily compounding
Factor in Annual and Transaction Fees
$95 annual fee on $5k average balance = 1.9% rate addition (24% becomes 25.9% effective). $300 balance transfer fee on $10k = 3% one-time cost. Amortize over expected balance period. Total effective rate = APR + fee impact.
Example:
Example: 24% APR + $95 fee on $5k = 25.9% total effective rate
Compare Multiple Card Offers
Card A: 24% APR, $0 fee. Card B: 19% APR, $95 annual fee. On $5k balance: A = $1,200 interest, B = $950 + $95 = $1,045. B saves $155. Calculator shows which card costs less based on your balance and usage.
Example:
Example: 19% + $95 fee beats 24% no-fee if balance over $4k
Evaluate Balance Transfer Offers
Current: $10k at 24% = $2,400/year. Offer: 0% for 18 months, 3% transfer fee ($300). Cost comparison: Stay = $3,600 (18 months at 24%), Transfer = $300. Savings: $3,300. But must pay off during promo or rate jumps to 24.99%.
Example:
Example: 0% for 18 months with 3% fee vs staying at 24%
Calculate Break-Even for Promotional APR
0% for 12 months then 24.99%. $6k balance, $400/month payment = paid in 15 months. During promo (12 mo): $0 interest. After (3 mo): ~$150 interest at 24.99%. vs Staying at 24%: $720 total interest. Transfer saves $570 minus 3% fee.
Example:
Example: Break-even at 15 months payoff for 0% intro offer
Expert Tips & Strategies
Always Calculate Effective APR Not Just Nominal Rate
Nominal 24% APR looks reasonable but effective 27.1% (daily compounding) is true cost. On $10k debt: $310/year difference. Banks advertise nominal rate - you pay effective rate. Calculate effective APR to understand real burden.
Include ALL Fees in APR Comparison
19% APR + $95 annual fee can cost more than 24% no-fee card depending on balance. On $3k balance: 19% = $570 + $95 fee = $665 vs 24% = $720 (similar). On $10k: 19% = $1,900 + $95 = $1,995 vs 24% = $2,400 (significant savings).
Request APR Reduction After 6-12 Months
Call issuer: "I've maintained perfect payment history for 12 months, requesting APR reduction from 24% to 19%." 50-70% success rate. 5% reduction on $10k = $500/year savings. Takes 5 minutes - always worth trying. Reapply if denied.
Avoid Cash Advances at All Costs
Cash advance APR 25-30% vs purchase APR 18-24%. Plus: (1) No grace period - interest starts immediately. (2) $10 or 5% fee. (3) Higher APR. $1,000 cash advance: $10 fee + $275/year interest = 28.5% effective cost. Use debit/bank withdrawal instead.
Watch for Penalty APR Triggers
Missing ONE payment can trigger penalty APR 29.99% for 6-12 months. On $10k balance: 24% to 29.99% = extra $600/year. Penalties cost thousands over time. Set autopay for minimum to prevent accidental late payments. Takes years to remove penalty rate.
Prioritize Paying Off Highest APR Cards First
Card A: $3k at 28%, Card B: $7k at 18%. Attack A aggressively (pay minimums on B). Eliminating 28% saves $840/year vs 18% saving $1,260. Higher rate = bigger savings per dollar paid off. Avalanche method mathematically optimal.
Transfer High APR Balances to 0% Promo Cards
$10k at 24% = $2,400/year interest. Transfer to 0% for 18 months with 3% fee ($300) = total cost $300 vs $3,600. Net savings $3,300. Critical: Must pay off during promo or loses all savings when rate jumps post-promo.
Understand Variable APR Means Rising Rates
Most cards: Variable APR = Prime Rate + margin. Prime currently 8.5%, card at Prime + 16% = 24.5%. Fed raises rates, Prime rises, your APR rises. If Prime increases 2% = 26.5% card APR. $10k balance = $200/year extra. No control over increases.
Common Mistakes to Avoid
✓ Better approach: 24% nominal APR = 27.1% effective APR with daily compounding. Underestimating true cost by $310/year on $10k balance. Always calculate effective APR: (1 + nominal/365)^365 - 1. Effective rate is what you actually pay. Nominal rate is marketing.
✓ Better approach: 19% APR + $95 fee on $3k balance = effective 22.2% total cost (higher than 20% no-fee card). Must factor fees into APR comparison. On small balances, fees hurt more. Calculate: Total Interest + Fees / Balance = Effective Rate.
✓ Better approach: 0% for 12 months sounds great but: (1) Requires 3-5% transfer fee. (2) Jumps to 24.99% after. (3) One late payment = lose promo rate immediately. (4) Doesn't apply to new purchases. Read terms - many gotchas that destroy value.
✓ Better approach: Paying $95/year for 19% APR vs 0-fee 24% card. Break-even: Need $1,900+ balance to benefit (5% APR difference × balance > $95). If balance under $2k, no-fee card cheaper. Only pay annual fee if balance justifies APR savings.
✓ Better approach: $1,000 cash advance: 29.99% APR (no grace period) + $50 fee (5%) + immediate interest start = $350 first year cost (35% effective rate). Vs $1,000 purchase at 24% with grace period = $0 if paid within 25 days. Cash advances 3-4× costlier.
✓ Better approach: Comparing 24% vs 19% APR without checking fees, compounding, or promo terms. 24% no-fee card can beat 19% with $95 fee on small balance. Must calculate: Total Annual Cost = Interest + Fees, then divide by average balance for true comparison.
✓ Better approach: "Fixed" APR can still change with 45-day notice or immediately with penalty triggers. One late payment = APR jumps to 29.99% penalty rate. Fixed only means not tied to Prime Rate - issuer can still raise it. Read cardholder agreement for change terms.
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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.