What Is APR (Annual Percentage Rate)?
The yearly cost of borrowing money, including interest and most fees, shown as a single percentage.
APR tells you what a loan or credit card really costs per year, rolling interest and standard fees into one comparable number. The higher the APR, the more expensive the debt — and credit-card APRs are often brutal, frequently above 20%.
It is the mirror image of the returns you hope to earn investing. Paying down a 24% APR balance is a guaranteed 24% "return," which is why clearing high-interest debt almost always beats investing until it is gone.
A card balance at 24% APR grows faster than almost any investment reliably returns — so every dollar aimed at that balance works harder than a dollar in the market.
Key points
- The true yearly cost of borrowing.
- Includes interest plus most fees.
- Clearing a high APR beats most investment returns.
Put it to use
Learning the basics? Follow the whole path from saving to investing.