APR

APR is the annual percentage rate a creditor discloses under the Truth in Lending Act. On a credit card it is the yearly price of borrowing on that plan. A purchase APR, a cash-advance APR, a balance-transfer APR, and a penalty APR can all sit on one account. The rate that applies to a given dollar is the one in the agreement for that kind of balance, including a promotional rate and the date it ends.

A monthly model often divides the APR by 12 to estimate one month of interest. A contract that uses a daily periodic rate divides by 365, or sometimes by 360, and multiplies by the days in the cycle or by an average daily balance. Those are not the same arithmetic. The statement’s interest charge is the figure the issuer actually assessed. The APR is the yearly label on the rate that produced it.

APR is not a credit score, and it is not the fee. An origination fee, a transfer fee, or a late fee can make the dollar cost higher than the interest the APR alone suggests. Compare offers on the interest you will pay and on the fees the disclosure lists, over the months you will actually carry the balance.