A guide to credit card APR

What is APR on a credit card?

APR stands for annual percentage rate. It’s the cost of borrowing on your credit card over a year, shown as a percentage. It includes:

• The interest you’d pay

• Any other standard charges such as an annual fee.

To keep things consistent and make comparing easier, lenders must show you the APR based on an assumed credit limit of £1,200, regardless of what you'd actually be offered.

Credit card APR can be very useful when you're trying to weigh up different credit card options. It gives you a quick way to compare the cost of borrowing between different providers, so you can spot a deal that might work well for you.

For example:

Card A

• Purchase rate (variable): 22.2%

• Annual fee: £250

• Credit limit: £1,200

• Representative APR (variable): 96.7%

Card B

• Purchase rate (variable): 22.9%

• Annual fee: £0

• Credit limit: £1,200

• Representative APR (variable): 22.9%

While the purchase rate for Card A is slightly lower, the impact of the annual fee on overall costs can be seen in the representative APR.

How does APR work on credit cards?

Credit card APR is designed to give you a clearer understanding of how much you’ll repay overall when you borrow money. But the actual figure depends on how and when you pay off your debt.

Credit cards have flexible payments and most lenders work out the interest monthly. So while APR is useful, think of it more as a rough guide.

For most cards:

• You can avoid paying interest altogether if you clear your balance in full each month by the due date

• If you don’t fully repay your balance, interest will kick in on your purchases (unless you’re on a 0% promotional deal).

Learn more in our guide to paying off credit card debt.

What is representative APR on a credit card?

Representative APR is an example of the rate you could get for your card. Until you actually apply, lenders can’t tell you your exact credit card APR.

To be able to advertise the representative rate, the lender needs to offer it to at least 51% of customers who successfully apply. Other customers could be charged a higher rate, assuming they’re offered a card at all.

The rate you get will depend on your credit history. Lenders want to know how likely you are to manage your borrowing - for example, will you repay on time every month, make late payments or even miss one altogether? Having a good credit rating means you’ve got a greater chance of getting that headline rate.

What’s not included in representative credit card APR?

The representative APR is based on using the card for purchases. It doesn’t consider other rates and fees that might apply if you use the card in different ways, such as for balance transfers or cash withdrawals.

It also only includes core charges. It doesn’t include fees or charges for:

• Late payments

• Going over your credit limit

• Returned payments (where a payment made on the card fails, for example due to insufficient available credit).

What is the average credit card APR?

The average APR on a credit card is 21.54% in the UK as of March 2025, according to the Bank of England. But the rate you’re offered could be higher or lower than that, based on elements including:

• Your credit score

• The type of card you’re applying for

• Current interest rates.

What is a good APR for a credit card?

To get a good APR, you’ll usually need a good credit score. But you may be eligible for a 0% purchase and balance transfer credit card that won’t charge you any interest for a certain length of time, provided you make your minimum monthly repayments.  These cards:

• Offer interest-free periods of around 3-30 months

• Automatically move you onto the much higher standard variable rate of interest once the 0% interest period ends.

What is a high APR for a credit card?

A high credit card APR is generally considered anything over 30%.

• Credit builder cards, designed for those with poor credit scores or no credit history, have some of the highest rates at around 30%+ APR

• Premium rewards credit cards that give you cashback or points every time you spend also tend to have high APRs because of their perks.

If you’ve got one of these types of card, it’s important to try and pay off your full balance each month. That way, you can avoid getting stung by the high interest and still enjoy the benefits.

Why could a rate of interest vary from what I actually pay back?

Each month, interest is charged on what you owe on your credit card – and if you haven’t cleared your debt, you‘ll be charged interest on the interest from the month before. This is known as compound interest and can soon bump up the total amount of interest you end up paying back. You'll really feel its effect if you borrow bigger sums over a long period of time.

Use our credit card repayment calculator to see how much you could save on interest if you make more than the minimum monthly repayment.

What else do I need to know about credit card APR?

While representative APR helps you compare cards, it doesn’t always reflect what you’ll actually end up paying. How you use the card and how much you can repay each month will also have an impact. Representative credit card APR is based on spending the full £1,200 limit on day one – and then not touching the card again. So while it can be useful for comparing cards, it's unlikely to reflect exactly how much you'd pay in reality.

Credit card providers will often try to tempt you in with rewards or cashback. Always ask yourself:

• Are these perks going to work for you in the long run...

• ...Or are you better off picking a credit card with a lower APR or one that better suits your spending style?

What our expert says...

“It's vital to know the APR on your credit card, as that’s the interest you pay. If you're on a promotional 0% interest rate, make sure you put a reminder in your diary before the 0% ends. This is so you can consider applying for a 0% balance transfer card if you can't clear your balance. Otherwise, you'd end up paying standard interest.

"If you are paying interest, have a think whether you can afford to pay your card off in full each month to avoid such charges. If that's the case, check out a cashback or rewards card as some pay you to spend.

"If you can't afford to pay it all off, check if you can save with a balance transfer credit card. Note that APRs can go up and down, so watch out for communication from your card provider. But always beware scammers pretending to be your card firm. If they ask for sensitive info or for you to click a link from an email or text, that's a fraud red flag.”

Sajni Shah, Personal finance expert

Where can I compare credit cards?

Here at Compare the Market, we let you compare credit cards quickly and easily with our eligibility checker, without impacting your credit score. The results could help you to avoid applying for credit cards you’re likely to be turned down for. You can also filter your choices by card type.

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.