What Does ‘APR’ Mean On Online Payday Loans And Credit Cards?


A situation in life may push you toward borrowing funds to fulfill an urgent need. There are many sources from which you can borrow money or compare loans, even with bad credit — such as NOWLOAN — and most, if not all, will charge against the borrowed money. Online payday loans are no exception.

Moneylenders earn their income from charges plus interest paid on top of the principal sum borrowed.

When you are borrowing, it is good to know the repayment terms, including the grace period, interest, penalties on default, and other charges that may accrue. We will help you understand what APR means and its use in determining interest on online payday loans and credit cards.

What Does ‘APR’ Mean On Online Payday Loans And Credit Cards?

Defining APR

APR stands for Annual Percentage Rate. Officially, this is the rate that will help you to determine the cost of borrowing from a bank, online payday loans companies, other financial institutions, and even when you use your credit card.

Commonly interest rate and APR are in use interchangeably but they are a bit different. APR is the cumulative of the interest rate and any other charges against the cash advance. It helps in determining the total cost of borrowing.

How Do You Use APR?

Before making a decision on the best option when borrowing, APR is a key guide. Literally, the higher the APR, the costly the loan is. Since APR is expressed as a percentage of the loan, a 12% APR is better than 17% APR. However, you should always read and understand the terms and conditions before making a decision.

APR has limits in that it only takes into consideration the compulsory charges. It does not include charges such as fines for late payments, for exceeding the credit limit, or payment protection.

Classifying APR

It is essential to know the type of APR that applies to your loan. Online payday loans lenders and credit cards can implement APR in varying ways.

Variable APR

This is an APR that is changing over time. An increase or decrease of the rate generally depends on the rates of APR in the area. It can become a benefit if the APR is lowered later, but a rise in the APR will mainly be a result of penalties. You should consider how the APR varies, especially if applying for online payday loans with no job. The possibility of defaulting payment on the due date is high and can increase the overall cost.

Fixed APR

This is a case where the rates are fixed, and as a borrower, you will have all information in advance. You will get a predetermined rate that does not fluctuate when receiving and during repayment of the loan. The only limit of fixed APR is that you won’t benefit from lower rates when the market changes.

Multiple APR

Online payday loans and also credit cards may have different APRs depending on transactions. Credit cards, in most cases, use multiple APRs. For instance, rates for a cash advance when you withdraw from an ATM may be higher than for a balance transfer or for your regular credit line.

Representative APR

This is the advertised rate that applicants will get in the deal. However, not all qualify for the advertised rate. That means even if you get approval, online payday loan places or the credit card provider may still charge more.

Personal APR

This is the actual APR rate you are given. The APR given can be as per the advertisement or higher depending on individual eligibility.

Online payday loan companies decide your rate on credit and the financial information you provide when applying for the loan.

What Does ‘APR’ Mean On Online Payday Loans And Credit Cards?

How Credit Card APR Is Determined

Some of the factors that credit card companies use to determine APR are:

Your Individual Credit History

The higher the credit score, the lower the APR. Some credit cards can offer varying APR depending on the borrower’s credit history.

Prime Rate

Since most credit card companies are under the regulation of the Federal Reserve, they have to comply with the set interest rates. This condition may not apply to credit cards with a fixed APR, which does not change as the prime rates change.

The Credit Card Itself

Different credit cards have different features; the same applies to APR. Some credit card companies will offer lower APR than others. Rewards credit cards, since they offer more value, may have a higher APR.

The above factors will also play a significant role when determining charges when applying through the online payday loans app.

Determining APR for Online Payday Loans

First, you will need to have information on the following three things:

·        Amount of money you qualify to borrow

·        Finance charge – the amount the credit will cost

·        Term of the loan (repayment period)

Let’s Express this Mathematically

Assume you borrow $400 at a finance charge of $60 with a repayment period of 14 days.

Step 1 – Divide the finance charge ($60) by the amount you receive ($400) = 0.15

Step 2 – Multiply the answer (0.15) by the number of days in the year (365) = 54.75

Step 3 – Divide the answer (54.75) by the term of the loan (14 days) = 3.91071

Step 4 – Multiply the answer (3.91071) by 100 or simply move the decimal to the right two places and add a percent sign = 391.071%. Since APR has only two decimals, round off our answer to 391.07%


Although borrowing through payday loans faces criticism and may seem like a costly affair, not everything qualifies for loans. Many platforms are offering online payday loans on the same day, and thus you can avoid all the formalities in other lending institutions. Most payday loan companies have an online payday loans app. The app will allow you to comfortably apply for a loan at your convenience.

Exercise caution when seeking payday loans you can get online. Ensure you get information on online payday loans reviews, how payday loans work, charges, and interest rates. The reviews provide you information regarding qualifications for eligibility.

Ensure you pay your principal amount on or before the due date. It will help you avoid penalties that can increase the cost of the loan and the APR.

With this information, we believe you can make better choices on what the best online payday loans platforms to borrow money are.

If you’re still unsure about what the APR rate is for an online payday loan you’re applying for, apply to Americash Payday Loans, and they will guide you.

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