Question 1

How does APR influence the overall cost of a loan?

Accepted Answer

The Annual Percentage Rate (APR) combines the annual interest and any associated fees, averaged over the life of the loan. This measure helps you compare the true costs of loans from different lenders, who may have varying fee structures.

Question 2

What does APR mean on a credit card?

Accepted Answer

APR, or Annual Percentage Rate, is the yearly cost of borrowing money on your credit card. It includes not only the interest rate charged on balances but also encompasses any other fees associated with the account.

Question 3

What implications does a 24% APR have on a credit card balance?

Accepted Answer

If your credit card has a 24% APR, and you owe $1,000, you would calculate the daily interest rate by dividing 24% by 365, resulting in about 0.066% daily, or approximately 66 cents per day. To find out the monthly interest, multiply this daily rate by the number of days in the billing cycle.

Question 4

What is the significance of APR when borrowing money?

Accepted Answer

The Annual Percentage Rate (APR) is the yearly rate charged for borrowing or earned through an investment. It reflects the actual yearly cost of a loan or the annual earnings from an investment, expressed as a percentage.

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