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The term annual percentage rate of charge (APR), [1] [2] corresponding sometimes to a nominal APR and sometimes to an effective APR (EAPR), [3] is the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, [4] etc. It is a finance charge expressed as an annual rate.
Details regarding the federal definition of finance charge are found in the Truth-in-Lending Act and Regulation Z, promulgated by the Federal Reserve Board. In personal finance, a finance charge may be considered simply the dollar amount paid to borrow money, while interest is a percentage amount paid such as annual percentage rate (APR). [2]
The annual interest rate is the rate over a period of one year. Other interest rates apply over different periods, such as a month or a day, but they are usually annualized . The interest rate has been characterized as "an index of the preference . . . for a dollar of present [income] over a dollar of future income". [ 1 ]
The Fed cut its federal funds rate — the interest rate banks charge each other for short-term loans — by 0.25 percentage points, lowered the rate to a range of 4.25% to 4.5%, down from its ...
Editor's note: Annual percentage yields shown are as of Monday, December 23, 2024, at 8:10 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change. Sources
Interest rates vary widely. Some credit card loans are secured by real estate, and can be as low as 6 to 12% in the U.S. (2005). [citation needed] Typical credit cards have interest rates between 7 and 36% in the U.S., depending largely upon the bank's risk evaluation methods and the borrower's credit history.
Currently, the average annual percentage rate on a new car loan is 7.1%, and 11.3% for a used car, according to Edmunds.
For a loan with a 10% nominal annual rate and daily compounding, the effective annual rate is 10.516%. For a loan of $10,000 (paid at the end of the year in a single lump sum ), the borrower would pay $51.56 more than one who was charged 10% interest, compounded annually.