What does APR mean on a credit card?

What is APR and why does it matter? Discover what APR means on credit cards, how it’s calculated, and what to consider when comparing rates.

Written by Alex Cook and Scott Yule

Published: 30/09/22Published on September 30th, 2022

Last reviewed: 17/11/25Last reviewed on November 17th, 2025

6 mins read

What is APR on a credit card? It’s a common question and no doubt a confusing term when it comes to the world of lending – especially if it’s your first time comparing or using a credit card.

But by understanding how APR works and its impact on borrowing, you’ll feel more confident to make better credit decisions, manage your debt, and choose a card that’s right for you.

In this guide, we’ll unpack what APR is and how it works. We’ll also walk you through the difference between personal and representative APR with useful tips on how to manage costs when it comes to borrowing.

APR explained

APR (annual percentage rate) is the official rate used by lenders to help you understand the cost of borrowing. It represents an annual figure which combines the credit card interest rate, plus any account management fees.

By law, lenders must display the APR prominently on their advertising. In doing so, it gives you a clear indication of how much you can expect to pay in interest when comparing different credit card options.

But before you sign up to a credit card with the lowest APR, it’s important to note credit card providers only have to give an advertised APR rate to 51% of customers that apply. So if you find an offer with 15% APR, you might end up paying more. Always read the terms and conditions.

It’s also worth checking whether your credit card comes with any other charges not included in the APR, such as payment protection fees, late payment penalties, or any other costly surprises that could put you further in debt.

Despite common misconceptions, you won’t be expected to pay the APR if you clear your balance in full on time each month. For that reason, it’s wise to borrow within your means, set up payment reminders, and stay on top of your account management.

What does APR include and not include?

Although APR helps to standardise credit costs across lenders, the actual monthly interest you might pay on a credit card can vary depending on how you use it.

Included in APR

• Interest rate on balance
• Account fees
• Application fees
• Origination fees

Not included in APR

• Late payment fees
• Over-limit fees
• Cash withdrawal fees
• Balance transfer fees

By understanding what APR includes (and what it doesn’t),you’re better positioned to avoid additional fees by using your card in the most cost-effective way.

What is a good APR for a credit card in the UK?

There’s no one-size-fits-all APR for a credit card in the UK. What’s deemed as ‘good’ will depend on a range of factors including your credit score, card type, and how you intend to use a card.

As a guide, the average APR is 24.3% in the UK, but it can fall to 20% or lower depending on the card provider. If you opt for a store card, rewards card, or credit builder card, you can expect an APR of 30% or higher.

If you have a credit card with a higher APR, it might be due to a limited or poor credit history where lenders consider you a higher risk for lending. By considering a credit card for bad credit, you could slowly build your credit health and potentially open doors to better lending options (provided your account is managed responsibly).

With an Aqua credit card for bad credit, you’ll also get expert tips and advice from Aqua Coach, payment reminders, plus the ability to track your score 24/7 from our app.

Representative 39.9% APR (variable) for Aqua Classic

What is personal vs representative APR?

Before you apply for a credit card, it’s important to understand the difference between personal and representative APR. Here’s a definition of each term and its purpose

Representative APR

Definition: The advertised rate offered to at least 51% of customers that apply.

Purpose: To help potential customers compare the costs of credit products.

Personal APR

Definition: The actual rate you’re offered depending on your creditworthiness.

Purpose: To understand the actual cost of borrowing based on your credit history.

When a credit card advertises a representative APR, almost half of applicants will be offered either a higher or lower amount. If you have a healthy credit score, it could be the case you receive a lower rate. Or, if you currently have bad credit, you may be offered stricter terms.

For example, the representative APR for an Aqua Classic credit card is 39.9%. As part of your application, we may offer you a higher or lower rate after comparing your credit information with our eligibility criteria.

Why is representative APR useful?

Representative APR is useful because it helps you compare credit card options on a like-for-like basis. By having a standardised view, you can also weigh up interest rates, standard fees, and the overall cost of borrowing to help you make an informed financial decision.

Although lenders are legally required to display representative APR in their advertising, you may be offered a different rate following an eligibility check. It all depends on your credit history and how responsible lenders deem you to be with credit.

But before you apply for a credit card, it’s smart to check your eligibility using a free eligibility checker tool. Not only can it help you focus on products where you’re more likely to get approved, but it can also protect your score from multiple hard searches that lead to declined applications.

Tips for managing APR costs

Although APR is an important factor when considering a credit card, what matters most is using your account responsibly by consistently demonstrating sensible borrowing behaviour. Here are some useful tips to help you reduce the impact of APR.

Clear your balance on time every month

By making payments on time every month, you’ll avoid paying APR on any outstanding balance. It’ll also help to protect your credit utilisation which goes a long way to building your credit score.

Consider a 0% purchase credit card

Provided you can pay back what you borrow within the introductory period, a 0% purchase credit card could make financial sense for bigger purchases such as a new sofa or a family holiday.

Stick to spending within your means

As tempting as it might be to increase spending with a credit card, you should only borrow what you can comfortably afford to repay each month. If you’re an Aqua customer, you can track spending and payment due dates using our app.

Set up a direct debit from your current account

Provided you have sufficient funds in your current account every month, setting up a direct debit to pay off your credit card is a sensible way to avoid interest and financially stay on track.

Understanding the difference between representative and personal APR can help you make smarter financial decisions when it comes to choosing a credit card.

What’s important to remember is an advertised APR could be different to what you’re offered, so always check the terms of your agreement to avoid unexpected charges and interest rates.

If you’re new to credit and want a better understanding of borrowing costs, explore our range of credit card options designed to support better credit habits and avoid additional fees by making payments on time.

Take our free eligibility check with no impact on your credit score. For further information, you can always check out our FAQs.

Representative 39.9% APR (variable) for Aqua Classic

Contributors

Alex Cook

Director of Enterprise Partnerships at Aqua.

Scott Yule

Scott is Director of Commercial Strategy & Analytics at Aqua.