APR

Americans owe a staggering $900 billion to credit card companies. That’s why most card-carrying members of the credit-card class aren’t surprised when the credit card company adds some sticker shock each month (for failing to pay their credit card off in full). These additional monthly interest payments are calculated using an annual percentage rate (APR) established by the federal government The APR is divided by twelve to arrive at a periodic interest rate, then multiplied against your monthly balance to come up with your monthly interest payment. References to APRs are often found in loan agreements and mortgages, or may be used in a contract as the standard for determining interest on late payments.