Annual percentage rate, or APR, expresses the yearly cost of borrowing as a single percentage that combines the interest rate with certain required fees. It is meant to make the cost of credit easier to compare across products. APR is distinct from the plain interest rate, and how it is calculated and disclosed is set by regulation and varies by country.
General information, not financial, legal, or tax advice. Verify current terms and eligibility with the provider before applying.
How annual percentage rate works
APR combines the interest charged on borrowing with certain mandatory costs into a single yearly percentage, so two credit products can be compared more directly than by interest rate alone. The way APR is calculated, and which fees must be included, is set by financial regulation and varies by country and product. For revolving credit such as a business credit card, the APR reflects the cost of carrying a balance and may not include every fee. APR is an annualised measure and does not by itself show the total amount repayable, which also depends on the amount borrowed and the term. This information is current as of 31 March 2026.
APR and the interest rate
The interest rate is the cost of borrowing the principal, while APR is broader and adds certain required fees to give an annualised cost of credit. Because of this, the APR on a product is often higher than its headline interest rate. Comparing products by APR can be more meaningful than comparing interest rates alone, but only when the products are similar in type and the APR is calculated on the same basis, which regulation aims to ensure within a market.
Why it matters to a business
When a business borrows, through a term loan, a line of credit, or a business credit card, APR helps compare the cost of borrowing across providers. The figure can depend on the amount, term, the borrower's profile, and whether the rate is fixed or variable, and not every cost is always captured. A business should look at the APR alongside the fees, repayment terms, and total amount repayable. Confirm the APR, how it is calculated, and all charges with the provider, as these vary by product and region.
Frequently asked questions
What is annual percentage rate?
What is the difference between APR and interest rate?
How is APR calculated?
Why does APR matter to a business?
Definitions, fees, features, and eligibility change and vary by region. This page was last reviewed on 31 March 2026. Confirm current terms with the provider before applying.