APR (Annual Percentage Rate) is a simple financial concept to grasp, however, calculating your APR is a much more difficult task. APR is the interest rate you are signed up to pay when dealing with credit and loans. Taking that interest rate you receive and dividing it by 365 (the number of days in a year) will give you a basic, yet not exact, amount that you will actually have to pay back in interest on any loan you take out.


For instance, if you take out a loan for $1,000 dollars at 10% APR and have to pay it back in one year with one payment, you are left with the equation of: ($1000 x 10% x 365 days (billing cycle of one year))/365 days) = $100 in interest. Add $1000 dollars to that and you will know the total loan cost will be $1100 dollars.

Of course this could never be accurate, especially if you are dealing with credit. Your credit account is constantly changing as you rack up purchases. If you pay off all debts before the end of a billing period, you don’t pay interest; however, if you can’t pay back the balance in full you can be stiffed with harsh APR interest. Following billing periods can increase the amount you own in interest if previous interest debts aren’t removed from the credit accounts.
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