1. What is APR?

APR (Annual Percentage Rate) represents the yearly cost of borrowing money, including interest and fees. It's a standardized way to compare the true cost of credit cards and loans.

2. How Does the Calculator Work?

The calculator uses the APR formula:

Where:

• \( Interest \) — Total interest charged (in dollars)
• \( Fees \) — Any additional fees (in dollars)
• \( Principal \) — Original loan amount (in dollars)
• \( Days \) — Term length in days

Explanation: The equation calculates the daily rate first, then annualizes it and converts to percentage.

3. Importance of APR Calculation

Details: APR helps consumers compare different credit offers and understand the true cost of borrowing. Lower APR means lower borrowing costs.

4. Using the Calculator

Tips: Enter all amounts in dollars (without $ sign), and days as a whole number. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both interest rate and fees, giving a more complete picture of borrowing costs.

Q2: What is a good APR for credit cards?
A: As of 2023, average credit card APR is around 20%. Rates below 15% are considered good, while rates above 25% are high.

Q3: Does this calculator work for other loans?
A: Yes, this formula works for any type of loan where you know the interest, fees, principal and term length.

Q4: Why multiply by 365?
A: This converts the daily rate to an annual rate. Some calculations use 360 days for simplicity.

Q5: How accurate is this calculation?
A: This gives a good estimate, but actual APR may vary based on compounding frequency and exact fee structures.