What is APR?
APR, or annual percentage rate, is the yearly cost of borrowing money, shown as a percentage. On a loan, the APR includes the interest rate plus certain fees. On a US credit card, the APR is simply the yearly interest rate. US law requires lenders to show it, so offers are easier to compare.
Interest is the price a lender charges for letting you use its money.
- AnnualCounted over one full year
- PercentageDollars per $100 you owe
- RateThe price of borrowing money
$1,000 owed for a full year at 20% APR costs about $200 in interest. That is $20 for every $100.
- $100 you owe
- $20 interest a year
APR calculator: estimate daily, monthly and yearly interest
Simple interest cost estimator.
Enter the amount you owe and your credit card APR to estimate interest. Interest is the cost of borrowing; it is only one part of a payment.
Enter $0 to $1,000,000 in whole dollars. The quick slider covers up to $25,000.
Use the number box for this amount; it is above the quick slider’s range.
Enter 0% to 100%, with up to two decimal places. The quick slider covers up to 40%.
Average US credit card APR: 21.19%. Rates as of August 2026.
Use the number box for this rate; it is above the quick slider’s range.
Where do I find my APR?
Look for Purchase APR on your credit card statement or agreement. Cash advances and balance transfers can have different APRs. For a loan, the interest rate can differ from the APR because the APR may include fees.
Interest estimates—not monthly payments. These figures assume the amount you owe stays unchanged. They exclude fees and interest charged on earlier interest (compounding).
Correct the highlighted input to see your interest estimate.
At 21% APR, a $3,000 unchanged balance has estimated interest of $1.73 per day, $52.50 per month on average, or $630.00 per year.
A compounding comparison: If interest were added to the balance every day, it would total about $700.81 over one year. This hypothetical assumes no payments, purchases, fees or rate changes. Actual card methods differ.
“Average per month” means yearly interest divided by 12. An actual billing cycle may have 28, 29, 30 or 31 days. This is not a repayment calculator or a forecast of your next bill.
Can I use this for a loan or mortgage?
A loan APR may include fees, so multiplying it by your balance does not necessarily give the interest charged. A loan payment also pays back some of the money borrowed. To estimate payments or total loan interest, use the loan’s interest rate, repayment schedule and fee details in a loan calculator.
APR vs. interest rate: what is the difference?
The interest rate is the price of the money. On loans, APR adds certain fees.
Same loan. Same payments. A fee changes the APR.
Both examples are $10,000 personal loans over 3 years at a 10% interest rate. An origination fee is a charge for making the loan.
No upfront fee
- Loan amount
- $10,000
- Fee taken out
- $0
- Money you receive
- $10,000
- Monthly payment
- About $322.67
- Interest rate
- 10%
- APR
- 10%
$500 upfront fee
- Loan amount
- $10,000
- Fee taken out
- $500
- Money you receive
- $9,500
- Monthly payment
- About $322.67
- Interest rate
- 10%
- APR
- About 13.56%
With the fee, you receive less money but make the same repayments. That makes borrowing more expensive, so the APR is higher.
Compare APR with APR across similar loan offers. Also compare fees and the total amount you would repay. A lower monthly payment can still cost more overall if payments continue for longer.
Sources: [2], [4]More about loan and mortgage fees
A loan APR combines the borrowing rate with charges that count toward the disclosed cost of credit. It also reflects when payments are due. Fees can make the APR higher than the interest rate.
For a mortgage, this can include lender charges, broker charges and discount points. Discount points are money paid at closing to obtain a lower rate; one point equals 1% of the loan amount. Some property-related closing charges, such as certain appraisal and title fees, are excluded when the legal conditions are met.
Sources: [2], [3], [13], [23]US disclosure rules require an APR for covered credit products. The rules differ between ordinary installment loans and credit cards, so an APR is not a complete list of every possible charge.
Sources: [14], [15], [28], [29]Our illustration: a $300,000 mortgage, 360 equal monthly payments, a 7% interest rate and $6,000 of included upfront fees gives an APR of about 7.20%. Actual disclosures can use different assumptions.
How is credit card APR charged?
Card interest builds daily. On most cards, paying in full on time avoids it on purchases.
An illustrative 30-day window after a statement closes. The two rows show different situations—not stages of the same account.
Grace period applies; statement paid in full on time$0 interest on purchases
No grace period; $2,000 stays unpaidabout $1.15 a day
- Empty cell: a day with no interest
- Filled cell: a day interest is added
- APR
- 21%
- ÷days in a year
- 365
- ×average daily balance
- $2,000
- =interest for one day
- $1.15
- The APR is turned into a daily rate. Many card issuers divide the APR by 365 (some use 360). This is called the daily periodic rate. 21% ÷ 365 = about 0.0575% a day.
- The daily rate is applied to the balance. Many issuers use the average daily balance: the average of what was owed on each day of the billing cycle (the roughly month-long period covered by one statement).
- The card’s method determines how interest adds up. Some agreements add each day’s interest to the balance used for the next day, so you are charged interest on earlier interest. This is called compounding. Other agreements use a method without daily compounding; a daily interest rate does not by itself tell you which method applies.
Without compounding, a $2,000 balance that stays unpaid at 21% APR for 30 days costs about $34.52: $2,000 × 21% ÷ 365 × 30. Starting with $2,000 and adding interest daily instead gives about $34.81, assuming no payments, new charges or fees.
A grace period can let you avoid purchase interest. When you qualify, pay the full statement balance by the due date. Paying only the minimum usually leaves interest to pay.
Sources: [7], [12]Grace periods, cash advances and later interest charges
A grace period is a chance to pay off eligible purchases after the statement closes without owing interest. Most cards offer one, but it is not required. The separate rule that the issuer must send or deliver a card statement at least 21 days before payment is due does not make every balance eligible for a grace period.
Sources: [7], [17]Cash advances generally start costing interest immediately. If you lose a purchase grace period, unpaid purchases and new purchases can start costing interest too. Your agreement explains how many full, on-time payments restore it. Interest already built up before a payment arrived may appear on the next bill.
Sources: [7], [8], [22]What to look for on your credit-card statement
Illustrative statement- Statement balance
- $1,000
- Minimum payment due
- $35
- Payment due date
- November 15, 2026
- Purchase APR
- 21%
Statement balance = the amount owed when the billing cycle ended. Paying the full $1,000 by the due date generally avoids interest on eligible purchases when a grace period applies. Your current balance can be different if you have made purchases or payments since then.
Minimum payment = the least you must pay by the due date. Paying only $35 would leave $965 of this statement balance unpaid, before any new interest or charges. It usually does not avoid interest or clear the debt.
Purchase APR = the yearly rate on purchases. It is not the amount of your payment. Other kinds of balance may have different APRs.
What are the different types of APR?
One card can carry several APRs, one for each kind of balance.
A credit card statement shows each balance that has its own APR. These are the common ones.
Purchase APR
The rate on things bought with the card.
Balance transfer APR
The rate on debt moved over from another card. A transfer sometimes comes with a fee.
Cash advance APR
The rate on cash taken out with the card. It is commonly higher than the purchase APR, there is usually a fee, and interest starts right away.
Introductory APR
A temporary promotional rate, sometimes 0%. Check when it ends and which balances qualify.
Penalty APR
A higher rate that can apply after late payments, subject to legal limits and your card’s terms.
Variable APR
A rate linked to a published benchmark, such as the prime rate. If that benchmark changes, your rate can change too.
When can a credit-card rate change?
US introductory card rates generally must last at least six months. After the offer, the stated regular rate applies. Variable rates can change with their benchmark. A fixed rate does not follow a benchmark, but it can change under the law and the agreement.
For a late-payment increase on an existing balance, the minimum payment must be more than 60 days overdue. The issuer must reverse that increase on the affected balance after six consecutive required payments arrive on time. Different rules can apply to new purchases and to other reasons for a rate change.
Sources: [9], [10], [16], [21]Watch for “if paid in full.” A deferred-interest offer can add earlier interest if you miss its payoff deadline. A genuine 0% APR offer does not add interest for the 0% period just because a balance remains.
Compare a 0% offer with deferred interest: a $400 example
0% APR and deferred interest: watch the difference
A $400 purchase, with $25 paid on time each month for 12 months. You repay $300, leaving $100 of the purchase unpaid.
“0% APR for 12 months”
No interest builds up on the promotional balance during the offer.
- Purchase still unpaid
- $100
- Interest for the offer period
- $0
- Owed when offer ends
- $100
In this example, the regular 25% APR then applies to the remaining balance going forward.
“No interest if paid in full in 12 months”
At a 25% rate, interest is recorded but held back. Because the purchase was not paid off in time, interest going back to the purchase is added.
- Purchase still unpaid
- $100
- Deferred interest added
- About $65
- Owed when offer ends
- About $165
In this example, the 25% rate continues on the remaining balance, including that added interest.
What is a good APR?
There is no single good APR. It depends on the product and the borrower.
Average US borrowing rates
Rates as of August 2026.
- Tick: average rate
A “good” APR depends on the kind of borrowing, your credit history and the offers available to you. These averages give context, but they do not show which rate you will qualify for. Compare offers for the same kind of loan and repayment length, including fees and the total dollars to repay.
What do these averages measure?
The first card row averages the APRs listed on accounts, including accounts that paid no interest. The second uses finance charges and balances on accounts that did pay interest. Loan rows average each reporting bank’s most common APR for that loan length. These measures differ, so compare a row with similar offers rather than treating every row as the same measure.
Mortgage rates are not included in this table.
Sources: [20]Borrowing outside the United States?
This page mainly explains US products and rules. Other countries define and disclose borrowing costs differently.
United Kingdom: APR includes interest and relevant fees. A “representative APR” is the advertised rate or better that the firm expects to apply to at least 51% of the credit agreements resulting from the promotion; you may be offered a higher rate.
Sources: [24], [25], [27]Canada: for a fixed-rate personal loan, a federally regulated lender must disclose the APR when it differs from the annual interest rate.
Sources: [26]APR vs. APY: what is the difference?
In the US, APR leaves out compounding. APY includes it.
Borrowing: APR
$1,000 owed at a 21% APR, with interest added daily and nothing paid for a year.
- Interest
- $210.00
- +Interest on interest
- $23.60
- =Cost for the year
- $233.60
Saving: APY
$10,000 saved at a 5% interest rate, with interest added monthly, for one year.
- Interest
- $500.00
- +Interest on interest
- $11.62
- =Earned in the year (5.12% APY)
- $511.62
APR is used for borrowing. APY, which stands for annual percentage yield, is used for saving. The key difference is compounding: earning (or being charged) interest on earlier interest. In the US, an APR is quoted without compounding. An APY includes it.
With $10,000 saved at a 5% interest rate and interest added monthly, you earn about $511.62 in one year instead of $500.00. The extra $11.62 comes from earning interest on earlier interest. That works out to about 5.12% APY, assuming no deposits or withdrawals and no rate changes.
Show the APY calculation
APY = (1 + r ÷ n)n − 1
r is the yearly interest rate as a decimal (5% = 0.05). n is the number of times interest is added in a year (monthly = 12).
For this example: (1 + 0.05 ÷ 12)12 − 1 = 0.051162… = about 5.12%.
Compounding works against a borrower in the same way. A card with a 21% APR that adds interest daily would cost about 23.36% over a full year in a hypothetical with no payments, purchases, fees or rate changes. On $1,000 that is about $233.60 instead of $210.00. Your card agreement determines how interest is actually calculated.
How do people lower the interest they pay?
Interest comes from three things: balance, rate and time.
These are common, general ways borrowers end up paying less interest. Whether any of them fits depends on the person and the product.
Interest=Balance×APR×Time
For simple interest on an unchanged balance, use the APR as a decimal (21% = 0.21) and time in years. Loan APRs can include fees; use the loan’s interest rate to calculate its interest.
A smaller balance
- Paying more than the minimum, or paying earlier in the billing cycle, lowers the average daily balance that interest is charged on.
How are extra payments divided?
US card issuers generally apply the part above the minimum to the balance with the highest APR. Special rules apply near the end of a deferred-interest offer. Ask your issuer how payments will be allocated.
Sources: [12]
A lower APR
- Offers differ from lender to lender, and credit scores affect the rates on offer. Comparing APR with APR keeps the comparison like for like.
- A balance can be moved to a lower-rate product. A balance transfer can come with a fee, and a promotional rate ends on a set date.
Less time
- On a card with a grace period, purchases cost no interest when the full statement balance is paid by the due date.
- Interest builds daily, so a balance that is paid off sooner has fewer days to be charged.
Same $2,000 balance, same 21% APR, one 30-day billing cycle
No payment during the cycle: $34.52 interest (average daily balance $2,000)
$1,000 paid after 15 days: $25.89 interest (average daily balance $1,500)
$1,000 paid after 5 days: $20.14 interest (average daily balance $1,166.67)
Frequently asked questions about APR
What does APR stand for?
APR stands for annual percentage rate. It is the cost of borrowing money for one year, shown as a percentage of the amount borrowed. On loans it includes the interest rate plus certain lender fees. On US credit cards it is the yearly interest rate. US lenders must disclose the APR so borrowers can compare offers.
Is APR the same as the interest rate?
On a US credit card, yes: the APR is the yearly interest rate, and fees such as an annual fee are not part of it. On a loan or mortgage, not always. The interest rate covers only the cost of borrowing the money, while the APR also counts certain fees, so the APR is usually the higher number.
Is APR charged monthly or yearly?
APR is a yearly rate, but interest is charged in smaller pieces. Many credit card issuers divide the APR by 365 to get a daily rate, apply it to the balance each day, and bill the total once per billing cycle. At 21% APR, an unchanged $3,000 balance has estimated simple interest of $1.73 a day, or $52.50 per month on average. These are interest estimates, not payments; actual bills depend on cycle length, balance changes, fees, compounding and any grace period.
What is a good APR?
There is no single good APR. It depends on the type of credit, the borrower's credit history, the loan term and market rates. One yardstick is the average: Federal Reserve data for August 2026 show an average credit card APR of 21.19% and an average 60-month new car loan rate of 7.54% at commercial banks.
What does 0% APR mean?
A 0% APR means no interest is charged on the balance for a set promotional period. On US credit cards, a promotional rate must generally last at least six months. When the period ends, the regular APR applies to whatever balance is left. This is different from a deferred interest offer, where unpaid balances can be charged interest back to the purchase date.
Do you pay interest if you pay your credit card in full every month?
On most credit cards, paying the full statement balance by the due date each month avoids interest on eligible purchases when a grace period applies. The statement balance is what you owed at the end of the billing cycle; the minimum payment is only the least you must pay. If you have already lost your grace period, paying in full once may not restore it immediately. Check the agreement. Cash advances usually have no grace period, so interest starts right away.
What is the difference between APR and APY?
In the US, APR (annual percentage rate) is used for borrowing and does not include compounding. APY (annual percentage yield) is used for savings and does include compounding, which is interest earned on earlier interest. The formula is APY = (1 + r/n)^n − 1. For example, a 5% rate compounded monthly gives an APY of about 5.12%.
Why is the APR higher than the interest rate on a mortgage?
A mortgage APR is usually higher than the interest rate because it counts more costs. It reflects the interest rate plus points, mortgage broker fees and other charges paid to get the loan, spread over the loan's term. Comparing one lender's APR with another lender's APR gives a like-for-like view of cost.
Can a credit card APR change?
Yes. A variable APR moves up or down with an index such as the prime rate. Card issuers can also raise a rate in other cases, generally with 45 days' advance notice for new purchases. A higher penalty rate can apply to an existing balance if the minimum payment is more than 60 days late.
Does 0% APR mean no fees?
No. A 0% APR means no interest on the balance covered by the offer while its terms are met. An annual fee or a balance-transfer fee may still apply. Check which transactions qualify, how long the offer lasts, the rate afterward and the required payments.
Where is APR on my credit-card statement?
Look for a section such as “Interest Charge Calculation” or “Annual Percentage Rate.” Find the Purchase APR for purchases; cash advances and balance transfers may have different rates. Your card agreement also lists the rates. Do not confuse the APR with the dollar amount of interest charged or the minimum payment.
Why doesn’t this interest estimate match my bill?
This calculator assumes an unchanged balance and simple interest. Real card bills depend on the balance on each day, when payments and purchases happen, the number of days in the cycle, the issuer’s calculation method, fees and any grace period. The monthly result is yearly interest divided by 12, not a prediction of a particular bill. On loans, APR can include fees, so it is not necessarily the rate used to calculate interest.
Sources
The facts on this page come from US regulators and official data, plus official UK and Canadian sources for the note on other countries. Rates as of August 2026, released October 7, 2026; checked October 10, 2026.
View all 30 references
- "What is a credit card interest rate? What does APR mean?" Consumer Financial Protection Bureau (CFPB), last reviewed Aug 28, 2023. consumerfinance.gov
- "What is the difference between a loan interest rate and the APR?" CFPB, last reviewed Aug 28, 2026. consumerfinance.gov
- "What is the difference between a mortgage interest rate and an APR?" CFPB, last reviewed Aug 28, 2026. consumerfinance.gov
- "Auto loans key terms" CFPB. consumerfinance.gov
- "What is a 'daily periodic rate' on a credit card?" CFPB, last reviewed Sep 23, 2024. consumerfinance.gov
- "How does my credit card company calculate the amount of interest I owe?" CFPB, last reviewed Jan 22, 2024. consumerfinance.gov
- "What is a grace period for a credit card?" CFPB, last reviewed Sep 23, 2024. consumerfinance.gov
- "Can I withdraw money from my credit card at an ATM?" CFPB, last reviewed Sep 2, 2026. consumerfinance.gov
- "What is the difference between a fixed APR and a variable APR?" CFPB, last reviewed Aug 28, 2020. consumerfinance.gov
- "When can my credit card company increase my interest rate?" CFPB, last reviewed Sep 22, 2022. consumerfinance.gov
- "How to understand special promotional financing offers on credit cards" CFPB blog (archived), June 8, 2017. consumerfinance.gov
- "Credit cards key terms" CFPB. consumerfinance.gov
- Regulation Z (Truth in Lending), 12 CFR § 1026.4 "Finance charge" CFPB. consumerfinance.gov
- Regulation Z, 12 CFR § 1026.14 "Determination of annual percentage rate" (open-end credit, such as credit cards) CFPB. consumerfinance.gov
- Regulation Z, 12 CFR § 1026.22 "Determination of annual percentage rate" (closed-end credit, such as loans) CFPB. consumerfinance.gov
- Regulation Z, 12 CFR § 1026.55 "Limitations on increasing annual percentage rates, fees, and charges" (Credit CARD Act rules) CFPB. consumerfinance.gov
- Regulation Z, 12 CFR § 1026.5 "General disclosure requirements" (statements at least 21 days before the due date) CFPB. consumerfinance.gov
- Regulation DD (Truth in Savings), 12 CFR § 1030.2 "Definitions" (annual percentage yield) CFPB. consumerfinance.gov
- Regulation DD, Appendix A to Part 1030 "Annual Percentage Yield Calculation" CFPB. consumerfinance.gov
- "Consumer Credit - G.19", release of October 7, 2026 (interest rates for Q3 2026, surveyed August 2026) Board of Governors of the Federal Reserve System. federalreserve.gov (always-latest version: federalreserve.gov/releases/g19/current/)
- "What is the prime rate, and does the Federal Reserve set the prime rate?" Board of Governors of the Federal Reserve System. federalreserve.gov
- "Credit card contract definitions" CFPB. consumerfinance.gov
- "How should I use lender credits and points (also called discount points)?" CFPB, last reviewed Oct 19, 2023. consumerfinance.gov
- "representative APR" (Handbook glossary) Financial Conduct Authority (UK). handbook.fca.org.uk
- "Personal loans" MoneyHelper (UK, Money and Pensions Service). moneyhelper.org.uk
- "Personal loans: know your rights" Financial Consumer Agency of Canada, modified Oct 15, 2025. canada.ca
- "FCA reviewing whether APRs support consumers' choices" (press release) Financial Conduct Authority (UK), April 29, 2026. fca.org.uk
- Regulation Z, 12 CFR § 1026.18 "Content of disclosures" CFPB. consumerfinance.gov
- Regulation Z, 12 CFR § 1026.60 "Credit and charge card applications and solicitations" CFPB. consumerfinance.gov
- Regulation Z, Appendix J to Part 1026 "Annual Percentage Rate Computations for Closed-End Credit Transactions" CFPB. consumerfinance.gov
Not financial advice
Educational information only—not financial, legal or tax advice. This page does not consider your finances or recommend a lender or credit product. Calculator results are estimates, not your actual bill or a loan offer.
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Check your own terms. Your agreement controls the rate, fees, payment rules and interest calculation. Examples leave out details that can change your costs. Historical averages are not promised rates, forecasts or a test of whether borrowing is affordable.
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Last updated: October 10, 2026.