The Fruitful perspective on  everyday finances.



When you are quoted an APR, dig deeper. Find out how and when the rate is applied, and whether there are other fees and charges.


It also stands for Annual Percentage Rate.

  • It is the interest you pay on a loan or credit card
  • It does not include compound interest

APR is complex, but a few tips can make you a wiser consumer.

APR and credit cards

With credit cards, know what your APRs are (yes, there are several). There is one for regular purchases, one for balance transfers, one for cash advances, and maybe more.

Pay off your credit card every month if you possibly can to avoid interest charges. If you cannot pay it off, calculate how much you are being charged for carrying a balance. It is always better to be aware than not.

APR and mortgages

With mortgages, shopping around is key. It is also important to have an expert to help you compare the quotes. You will be quoted an APR, but there are also fees.

Sometimes a higher APR and lower fees can be a better deal than a lower APR and higher fees. This is true especially as mortgages are often 30-year, but the average length of home ownership is only 16 years. Upfront fees allow a lender to get more of your money more quickly. (And the more you pay up front, the longer you need to stay in the home to justify those fees.)

Sadly, most lenders cannot be trusted to look after your best interests.

So always look into the total cost of a credit card or mortgage, not just the APR.