What is APR?
Reviewed by the CompareMyCard editorial team · Last updated 14 August 2026
APR stands for annual percentage rate, it's the yearly cost of borrowing on your credit card, expressed as a percentage. It's closely related to your interest rate but not identical: APR can include certain fees on top of the base interest rate, which is why the APR listed on a card is sometimes slightly higher than the interest rate alone.
Most credit cards have a range, something like 19.99% to 28.99% variable APR, because the exact rate you get depends on your creditworthiness when you're approved.
A worked example
Say your card has a 24.99% APR and you carry a $1,000 balance for a full year without paying it off. Roughly speaking, you'd owe about $250 in interest over that year, on top of the $1,000 you borrowed, assuming you don't pay any of it down. In practice, interest compounds daily on most cards, so the real number is usually a bit higher than a simple back-of-envelope calculation.
Why it matters when choosing a card
If you pay your statement balance in full every month, APR barely matters, you're not charged interest at all. APR becomes the single most important number on the card if there's any chance you'll carry a balance. This is also why 0% intro APR cards are worth a look if you're planning a large purchase or a balance transfer.