How To Guide For: Understanding Credit Card APR--How It Works & How It's Calculated

In order to understand credit card APR, we need to first know what APR is. APR stands for Annual Percentage Rate - which means the amount of interest on your total loan amount that you'll pay annually (averaged over the full term of the loan). Basically the price you pay for borrowing money. On most credit cards you can avoid paying interest on purchases if you pay your balance in full each month. To calculate interest on a loan you would calculate (Interest rate) multiplied by (account balance) multiplied by (period of time).

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