APR stands for Annual Percentage Rate. It is used by lenders to help consumers understand how much it will cost to borrow money over the period of a year.

What is included in the APR rate?

The APR takes into account both the amount of interest charged and any additional fees or charges incurred when borrowing the money.

An example would be for a credit card. The APR rate would include the interest payable on borrowing the money plus any automatic charges such as an annual credit card fee.

What is the Representative Example for a credit card?

When viewing credit card details or comparing credit cards, you will often see a 'Representative Example' displayed. This example is usually based on a £1,200 credit card limit but may vary for lower limit cards such as Credit Builder credit cards for people with a lower credit score.

The example will generally show the interest rate for making a purchase on the credit card and the representative APR rate after taking into account other charges such as an annual fee. If there are no additional charges then both of these rates will be the same.

The Representative Example is based on credit card purchases only. It does not show the rate for other ways in which you may use your card e.g. balance transfers or cash withdrawals. You should check with the credit card provider for all rates and fees associated with using the card in different ways.

Other issues to consider

The example above assumes that you will borrow the full £1,200 from day 1 and pay it back over the 12 months. The amount charged might vary depending on how you use the card. For example, if you borrow more than £1,200 or if you do not keep up with regular repayments.