What is APR?

APR stands for Annual Percentage Rate and is the cost of borrowing money over a year on a credit card or loan. It takes into account interest, as well as other charges you may have to pay such as an annual fee. When you’re looking at potential credit cards or loans you may see representative APR advertised.

Given that lenders offer different interest rates based on your individual application, representative APR is an example that allows you to compare between lenders and products quickly without having to apply. To advertise the rate, the lender needs to offer the rate to at least 51% of the customers who successfully apply.

What does representative APR include?

The representative APR includes the rate of interest – for credit cards, there can be different rates so the APR uses the rate which applies to the way the card is most commonly used. This is usually the standard purchase rate. It also takes into account other charges you'd automatically have to pay such as an annual fee or loan arrangement fee.

For credit cards, it's based on a credit limit of £1,200 and assumes you spend the full £1,200 on the first day and then pay it back in equal, regular instalments over a year without spending anything else.

Explore more: How do credit cards work?

What does a representative example look like?

Example 1:

Below is a representative example for a credit card with a purchase interest rate is 21.9% and no annual fee.

Representative APR (variable) 

21.9% APR

Purchase rate (variable) 

21.9% p.a.

Annual fee


Based on assumed credit limit of 



Example 2:

Compare this with another credit card that has a purchase interest rate of 18.9% and an annual fee of £195.

Representative APR (variable)

59.3% APR

Purchase rate (variable) 

18.9% p.a.

Annual fee 


Based on assumed credit limit of 




While the purchase rate in the first example is lower than the second example, the £195 annual fee is included in the representative APR – so the representative APR rises to 59.3%.

However, it's important to note that representative APR doesn't take into account the benefits you can earn from using different kinds of credit cards.

What's not included?

For credit cards, the representative APR assumes you only use the card for purchases and doesn't take into account different rates and fees which might apply if you use the card in different ways, such as for balance transfers or cash withdrawals.

It also doesn't include any fees or charges for things like late payments, going over your credit limit or returned payments. Only compulsory charges are included in the representative APR – so charges like payment protection insurance aren't included either.

What else do you need to know?

The representative APR helps you quickly compare cards and loans. It will not necessarily match up to what a card or loan costs you. That will depend on the final rate you’re offered, how you use either the credit card or loan and how much repay each month.