What does APR mean?

Last Updated: May 24, 2013 11:23PM UTC

APR stands for "annual percentage rate," and refers to the amount of interest you'll be charged on a yearly basis.

Since credit card interest is typically charged on a monthly basis, the amount of interest charges is typically calculated by dividing the APR by 12 (for 12 months in a year) and multiplying this amount by the average daily balance.

For example, if your average daily balance for the billing cycle is $500 and your card has an APR of 17%, interest charges would be: $500 x (0.17/12) = $7.08.

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