What does APR mean on a credit-card agreement?

APR means annual percentage rate on a credit-card agreement.

The annual percentage rate expresses the yearly cost of borrowing as a percentage. Credit-card agreements may list separate APRs for purchases, balance transfers, and cash advances, because those transaction types can have different pricing.

A card’s APR is not always the same as the interest rate used for a particular billing period. Issuers commonly calculate periodic interest from a daily or monthly rate derived from the stated APR, subject to the agreement and applicable law. The balance, payment timing, and grace-period rules also affect the interest actually charged.

APR can be confused with a card’s annual fee. The annual fee is a fixed charge for holding or using the account, while APR concerns borrowing costs. Promotional APR offers may temporarily reduce or eliminate interest for a stated period, but they normally have conditions and an expiration date. Comparing APRs is most useful when comparing similar products and repayment patterns.