Annual percentage rate (APR) and effective APR
7:12
Khan AcademySal Khan
Annual percentage rate (APR) and effective APR
APR stands for Annual Percentage Rate. It's the yearly interest rate you pay on a loan or credit card. However, a credit card's advertised APR isn't the true interest rate because it compounds daily. Learn how to calculate the effective APR to find a card's true interest rate.
Feb 20, 2011
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Interest Rate vs. APR — What’s the REAL Difference? This question comes up all the time, and honestly it’s one of the most misunderstood parts of borrowing money. In this quick conversation, I ask a simple question and Margie (Signing Home Loans) breaks it down in a way that actually makes sense. Interest Rate is the cost of borrowing money. This is what your monthly payment is primarily based on. APR (Annual Percentage Rate) is the true cost of the loan. APR includes interest plus certain upfro
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Interest Rate vs. APR — What’s the REAL Difference? This question comes up all the time, and honestly it’s one of the most misunderstood parts of borrowing money. In this quick conversation, I ask a simple question and Margie (Signing Home Loans) breaks it down in a way that actually makes sense. Interest Rate is the cost of borrowing money. This is what your monthly payment is primarily based on. APR (Annual Percentage Rate) is the true cost of the loan. APR includes interest plus certain upfro
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