What to Know About Annual Percentage Rates (APR)
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If you have ever thought about taking out a loan or a credit card, you will have seen a number with APR next to it, but what does that actually mean?
An APR or Annual Percentage Rate is the rate of interest you will repay on your debt every year.
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“In the simplest of terms, if you have a card with a rate of 15 percent and you carry an outstanding balance of $1,000, you’ll pay $150 per year in interest on that $1,000,” credit reporting agency TransUnion states on their website. This will differ from lender to lender and there may be other costs and fees involved.
Some APRs can be variable, so you start off with a lower rate and then it increases over time. This is normally the case with mortgages.
Lenders often lock-in low APRs with a simple phone call, TransUnion says, especially if you’ve had long, good standing in your loan.
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It can also be good to shop around, even looking for a good deal on a balance transfer for any existing cards, to see you can get a lower rate.
Having a good credit history is a way of ensuring that you don’t pay the highest APR. Checking that your credit report is up to date and bills are paid on time can help you in the future.
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