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APR has so much to answer for. If all you know about APR's is that they are a number that comes with credit cards and you look at to see if one is better than another this this is the article for you. In this article APR will be revealed in all of its financial splendour. APR will be reconstructed like a surrealist text. APR will be shown for what it truly is. But seriously if you're thinking of applying for a new card, perhaps even a low APR credit card, or if you have a card and have never really thought about it, you really should know what an APR is and does.

APR stands for Annual Percentage Rate and is the overall rate of the card. This figure includes the interest rates themselves as well as any one off fees that you may be expected to pay and so on. It is different to the monthly interest rate because this figure doesn't include the fee etc. In the days before APRs companies could make their card seem better than it actually was by not disclosing all of the extra costs. Basically a card could look like a low APR credit card even if it wasn't.

In the US and the UK, disclosing the APR is now an industry and governmental requirement. This means that it has to be disclosed to consumers so that they can make an informed choice and know the real cost of having the card. The APR is the effective annual rate of the card. In the UK the need for credit card companies to disclose full details of their credit cards was made a legal requirement under the Consumer Credit Act 1974. The way that is calculated in the UK, and across Europe, is different to how it is done in America so the interest rates here look higher than a similar card in the US.

However, it is not just a simple matter of looking at the APR and going, ah that is how much I will need to repay over a year. The APR is an approximation of the amount you will need to pay. If you end up paying off your balance over the year at a higher rate than the average you will pay less money than the APR would suggest. Similarly if you pay less then you are going to end up paying considerablye more. For example, an APR of 16.9% would seem to suggest that on a 1000 borrowing throughout a year you are going to pay off, £1169 at the end of the year. This isn't the case, it could be more or less than this.

It is difficult to say what the average APR for a credit card is because there are fluctuations over time. At present it is somewhere around 16.9%. Anything higher than this could be considered a little steep whereas low is starting to get into the realms of a low APR credit card. An APR lower than 10% is extreme good whereas one approaching 5% is amazing. However high APR cards shouldn't be dismissed out of hand because often there are other benefits on offer that make them worthwhile.

APR's were introduced to make the credit industry transparent and to stop companies from being able to blind consumers with figures. These figures could be made to look better than they actually were. In 1974 things changed and the APR became compulsory. The APR allows you to compare credit cards easily at a glance and see which are good or bad. The average APR is around 17% and anything lower than 10% is very good. Obviously the lower the better. You must remember that some high rate cards offer extras that can't be found elsewhere so they are still worth looking at. Also low APR credit cards are difficult to be accepted for unless for have an excellent credit history. Having said this low APR cards are amongst the best out there and, after a little work on your credit rating perhaps, are well worth applying for.