Demystifying Financial Jargon: APR & Interest Rate


Annual Percentage Rate or APR and interest rate are often used interchangeably, but there’s a subtle difference of which you need to be aware. APR encompasses all the fees that may be associated with a loan. Typically, with credit cards there are not fees other than maybe an annual fee to consider. With mortgages though, you can use APR to compare a variety of lenders.

Interest Rate

Interest rate is simple, it’s the annual cost you’ll be paying to take out the loan and it’s generally written as a percentage of the principal. It does not factor in any fees you may be paying. When comparing offers on loans, it’s best to compare the APRs, which includes fees, not just the interest rate.

Share on FacebookTweet about this on TwitterShare on LinkedInPin on Pinterest