Whether you’re comparing credit card interest rates or just want to figure out how much your credit card debt is costing you, it’s important to understand how the interest you are being charged is calculated.
Credit card interest rates (the rates that you are charged) are usually expressed in terms of APR (annual percentage rate). APR is calculated by taking the periodic rate and multiplying it by the number of periods in a year. For example, if you are charged 1% interest per month and are billed monthly, the APR would be 12%. (.01 x 12 = .12).