What’s a representative example
and representative APR?
Whenever you borrow money on a credit card, you'll usually find there's an interest rate applied to it. This is typically expressed on a yearly or ‘per annum’ basis. The APR is the yearly cost on top of the money you borrow - it stands for annual percentage rate of charge, and is the interest charge including any annual fee you’d pay.
Many lenders show you a range of credit card offers up-front, but it’s important to bear in mind you might not get the advertised rate if you don’t meet their eligibility criteria.
The MBNA website is a little different. Before you see any credit card offers, you’ll need to take a Clever Check – our credit card eligibility checker. Your results will include the exact offers and representative APR you’ll get, if you go on to complete a full application and you’re approved.
The representative APR allows you to compare one credit card against another. It’s usually the card purchase interest rate that’s used for the representative APR for credit cards.
A representative example is used to show the typical costs associated with a particular credit card, and shows you how much it could cost if you borrowed £1,200 over a year.
It will include:
- The purchase rate (not transfer rates) and whether they’re fixed or variable.
- The example shows the representative APR and whether it’s fixed or variable.
- The amount of any annual fee (if applicable).
- An example amount borrowed of £1,200.
It doesn’t include:
- Any other fees such as default fees or transfer fees.
- The actual credit limit you might be offered.
- The figure of £1,200 is used so it’s easy to compare one credit card against another. However, this doesn’t mean £1,200 is the credit limit you’d be offered – this is based on affordability and individual circumstances, if you go ahead with a full application, and are accepted.
Having all lenders show consumers the same standardised key information means it’s easier to compare.
How useful are representative APRs/examples?
While representative APRs and representative examples make it easier for consumers to compare one product against another, it isn’t the only consideration when choosing a credit card suitable for your needs.
It’s important you read through the terms and conditions of the credit card you’re interested in, checking for things like fees and charges for the type of transactions you’re most likely to make.
How will I know what representative APR I will get?
Just bear in mind that the representative APR/example also doesn’t take into account things like introductory promotional offers on balance or money transfers, as it’s usually the purchase interest rate used in the representative APR/example.
While the representative APR/example takes into account any annual fee payable for the credit card, it doesn’t take into account other fees like late or default fees, handling fees for making balance or money transfers, or non-sterling transaction fees if you plan to use your card abroad etc.
Clever Check - our credit card eligibility checker
In just a few minutes, see the MBNA credit cards you’re eligible to apply for, your estimated credit limit and the likelihood of being accepted - all without affecting your credit rating. Your Clever Check results will include details of any promotional offers, along with a representative APR and example to help you understand the costs.
It’s a quick and easy way to see if we can meet your borrowing needs before you spend time completing a full application.
Introductory interest rates
If you’re looking for a balance or money transfer offer, you need to look out for introductory interest rates where you start off paying a low interest rate or no interest at all. The rate then usually increases after a certain amount of time.
You should also compare fees a lender charges for transfers, as well as the standard interest rate the offers change to at the end of the introductory period. This will be important if you know you won’t have paid the full balance off by the time the introductory offer ends.
Rewards credit cards representative APR
Rewards, like points or cash back offered on some types of credit card are also not taken into account in the representative APR/example.
If earning rewards or cash back are going to be important features for you, then you’ll also want to compare how many points or how much cash back you’d receive for every £1 you spend on the card, whether there are any restrictions on these (e.g. if you spend a certain amount or can only spend at certain retailers), when points would expire, and what you can use them for.