1. What is APR?

APR (Annual Percentage Rate) represents the yearly cost of borrowing money, including interest and fees. It provides a standardized way to compare credit card costs.

2. How Does the Calculator Work?

The calculator uses the APR formula:

Where:

• \( interest \) — Total interest charged during period
• \( fees \) — Any additional fees charged
• \( balance \) — Average daily balance or principal
• \( days \) — Number of days in the billing period

Explanation: The formula converts the periodic rate to an annual rate by accounting for compounding over a 365-day year.

3. Importance of APR Calculation

Details: Understanding APR helps consumers compare credit card offers and understand the true cost of carrying a balance. Lower APRs mean lower borrowing costs.

4. Using the Calculator

Tips: Enter all amounts in dollars (without $ sign), and days as a positive integer. Ensure your balance and days values are greater than zero for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both interest rate and fees, giving a more complete picture of borrowing costs.

Q2: What is a good APR for a credit card?
A: As of 2023, average APRs range from 15-25%. Below 15% is considered good, while above 25% is high.

Q3: Does APR include all fees?
A: It includes most fees but may exclude penalty fees like late payment charges.

Q4: How often does APR change?
A: Variable APRs change with the prime rate. Fixed APRs can change with 45 days notice.

Q5: Can I negotiate my APR?
A: Yes, especially if you have good credit. Contact your card issuer to request a lower rate.