The cost of borrowing 

APR is the total cost of borrowing money over a year and can be useful when comparing credit products, for example credit cards and loans.

At a glance:

  • The higher the APR, the more expensive it is to borrow. 
  • The lower the APR, the less it will cost you to borrow. 
  • Helping you understand APR.

    Helping you understand APR – Annual Percentage Rate – is an indication of how much your borrowing will cost over the year.

    The higher the APR, the more it’ll cost you to borrow.

    APR includes the interest paid on borrowing … as well as any other fees, such as an application fee or annual or monthly fees.

    It doesn’t include all charges … such as fees for cash withdrawals or late payments.

    You might have heard the term ‘Representative APR’

    This simply means the rate that most people can expect to be offered. It’s not guaranteed for everyone … but it can help you compare different cards from different providers

    Some cards may have a higher interest rate, with no additional fees.

    Or it may offer lower interest but then charge for every year you have the card … although sometimes these types of card may come with additional benefits.

    Remember to consider your options so you can pick a card that’s right for you.

    Let’s go over the key points to understanding APR.

    The APR includes interest paid on borrowing, as well as fees.

    The higher your credit card’s APR, the more it’ll cost you to borrow.

    Representative APR is helpful for simple comparisons.

    MBNA – choices made simple.

APR is...

The credit interest rate.


Any annual and application fees are included.


The cost of borrowing over a year shown as a percentage.

The difference between interest rates and APR

An interest rate is just one part of the cost of borrowing. APR includes interest rates as well as other costs that may also come with taking out credit. So, an APR can give you the bigger picture. 

APR doesn't include all costs

APR gives an idea of how much it could cost to borrow overall over 12 months,  but it doesn’t cover every cost. For example, APR doesn’t take into account future fees or charges, such as late payment fees or transfer fees.

What's a representative APR?

Lenders will usually show a representative APR and representative example to give you an idea of how much it could cost to borrow over a year.

A representative example is usually based on 4 things:

  1. An assumed amount of borrowing of £1,200. 
  2. Any other fees, such as an annual fee.
  3. The purchase interest rate.
  4. The representative APR, which is the rate that at least 51% of applicants can expect to be offered.

Why look at a representative APR?  

It can be easier to compare credit products with a representative APR. Things like annual fees could push an APR up, but there may be additional benefits that come with those fees. So it’s important to check all the details before deciding on the right credit product for you.

Take a look at this example credit card comparison:


Amount borrowed

Interest rate on standard purchases (variable)

Annual card fee    

Representative APR


Credit card A

Amount borrowed


Interest rate on standard purchases (variable)

18.94% p.a.

Annual card fee    


Representative APR



Credit card B

Amount borrowed


Interest rate on standard purchases (variable)

18.94% p.a.

Annual card fee    


Representative APR


Check if you're eligible

Clever Check makes it easy to compare the MBNA cards you’re eligible for. It’s quick to complete a check online:

  • See which cards you’re eligible to apply for. 
  • Get an estimated credit limit up-front. 
  • Clever Check only takes about 5 minutes to complete and has no impact on your credit score. 

Check your eligibility


  • Representative APR gives you an idea of how much it will cost to borrow over a year. AER or Annual Effective Rate, is used to show what you would earn in interest from different savings accounts over a year. AER makes it easier to compare savings accounts that might have differences between them. It’s a bit like how APR works for borrowing products, such as credit cards and loans. 

  • No. Your circumstances and borrowing history can influence how much it would cost you to borrow. At least 51% of applicants receive the advertised Representative APR. Lots of lenders offer ways to check your eligibility, so even if you don’t get the Representative APR you may be offered a different rate. 

    Check your credit card eligibility with MBNA using our quick Clever Check.

  • APR is useful for making comparisons between credit products. But you should always look at the full picture, and your personal situation. Can you afford the repayments? And have you accounted for any extra fees and charges?

A quick recap

Here’s what you’ve learnt about APR:

  • An APR shows how much it cost you to borrow over the course of a year.
  • APR is usually based on purchase interest rate plus additional fees.
  • A representative example is helpful for comparing credit products.

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