Understanding APR: What It Means and When It Matters

APR stands for Annual Percentage Rate. It’s the interest you pay on credit card balances. Here’s what you need to know.

When APR Matters

APR matters when you carry a balance. If you have $5,000 in credit card debt at 24% APR, you’re paying roughly $100/month in interest alone.

APR doesn’t matter if you pay in full. Pay your statement balance by the due date, and you pay zero interest—regardless of the APR.

The Bottom Line

If you pay your balance in full monthly, APR is irrelevant. If you carry balances, APR is one of the most expensive costs in your financial life. The solution isn’t finding a lower APR—it’s not carrying a balance.