What is APR?

Inform your credit card decisions with a deeper understanding.


Your guide to APR

APR stands for Annual Percentage Rate.

APR gives you an estimate of how much your credit card borrowing will cost over a year – as a percentage of the money borrowed.

  • The higher it is, the more expensive it’ll be for you to borrow.
  • The lower it is, the cheaper it’ll be for you to borrow.

How is APR different from interest?

Sometimes, the interest rate isn’t the only cost of a credit card. To account for this, APR considers both a card’s interest rate and any other standard fees. This means that the APR percentage offers a more complete picture of how much borrowing will cost.

What does APR include?

Infographic showing 3 boxes. . Box 1 is green, showing a percentage icon and the word interest. Between box 1 and 2 is the plus symbol. Box 2 is dark green and shows the pound icon and the word fees. Then between box 2 and box 3 is the equal symbol. Box 3 is blue and shows the letters A, P and R.


In general, most APR calculations use the interest rate for card purchases.


The cost of other standard charges. For example, any application fees or annual card fees.


Annual Percentage Rate. An estimate of your cost of borrowing.

What doesn't APR include?

  • APR only includes standard fees – not extra charges such as fees for cash withdrawals, late payments or going over your credit limit, which some lenders may charge you.

More on credit card fees

  • APR is usually based on your standard purchase interest rate. But the rates for balance transfers, cash withdrawals and money transfers might be higher.

More on interest rates

What is Representative APR?

This is the rate offered to the majority of customers. So if you see an advert with a representative APR of 18.9%, then usually at least 51% of applicants are expected to get that rate.

To make comparisons easier, most Representative APR is calculated based on these assumptions: 

  1. A credit limit of £1,200. 
  2. Spending all £1,200 on the first day. 
  3. Then paying it back in equal, regular instalments over the year. 
  4. With no other spending.

Why is Representative APR useful?

Most banks and credit card companies use representative APR, so it can be a quick and easy way to compare the differences between two or more cards. However, remember that a simplified comparison like this should be followed up with further research.


Credit limit

Standard Purchase Interest Rate (variable)

Annual card fee

Representative APR


Credit Card A

Credit limit


Standard Purchase Interest Rate (variable)


Annual card fee


Representative APR



Credit Card B

Credit limit


Standard Purchase Interest Rate (variable)


Annual card fee


Representative APR


One Check: our credit card eligibility checker

We think it’s helpful to show your personal estimated credit limit and APR, and the cards you’re eligible to apply for.

By using our simple credit card eligibility checker, One Check, in just 5 minutes we can usually give you a more accurate and personalised offer, without affecting your credit score.

Check your eligibility

Frequently Asked Questions

  • When you borrow money, you pay interest for the service of borrowing.

    Representative APR gives you an estimate of the yearly cost of this borrowing including any standard fees (e.g. Annual Card fees).

    The AER or Annual Effective rate (sometimes referred to as Annual Equivalent Rate) is the actual rate for the amount you have borrowed including interest accrued over a 12 month period. The AER is a compounded interest rate, meaning it also includes the impact of accruing interest on interest already billed.

  • No, the rate advertised is the rate that at least 51% of applicants will be offered. Most card issuers offer a range of APRs, and the actual rate you’ll be offered will depend on your credit score and financial history.

    Many credit card issuers provide an eligibility check that helps you find out what card and APR you are likely to be accepted for. At Lloyds Bank, our simple credit card eligibility checker, One Check, only takes about 5 minutes to complete.

    Find out more about credit cards and credit scores

  • No. Besides APR, there are plenty of other factors to take into account.

    For example, the fees you might be charged – these may vary between credit card issuers.

     How you intend to use your credit card may also change. For example, you may have taken out a credit card to consolidate your card debt and the balance has been paid off. Now you’d like to make a purchase or put your day-to-day spending on a card. Swapping your card means you can have a new credit card that meets your current needs.

    It’s best to take the time to research your choice thoroughly.

Key points on Annual Percentage Rate (APR)

  • APR gives you an estimate of how much borrowing money on a credit card will cost.
  • In fact, it includes interest rates and all standard fees.
  • The lower the APR, the cheaper it is for you to borrow.
  • But APR doesn’t include late fees, cash withdrawal fees and other extra charges.
  • You should still read the terms and conditions and summary box to see if a card is right for you.

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