What is APR?

APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR takes into account not just the interest on the loan but also other charges you have to pay, for example, any arrangement fee. All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around. Don't forget that sometimes bank loans are cheaper than the credit schemes offered by stores.

If you find a deal with a low APR, ask the following questions:

Does the interest included in the APR vary, or is the rate fixed? If the rate is variable, your repayments could go up or go down. If the rate is fixed, your repayments will stay the same.
Are there any charges that are not included in the APR? This could include something like optional payment protection insurance. If so, make sure you understand what they are and When you would have to pay them.
What are the conditions of the loan or credit and do they suit you? For example, do you have a choice about how and where you make the repayments?
If you suddenly have spare money, can you pay the loan off early - without penalties?
Can you afford the monthly payments? A more expensive loan (with a higher APR) could have lower monthly payments if they are spread out over a longer period of time. That might suit you better if your budget is tight.

Find out what your repayments will cost with our Credit Card Repayment Calculator.

What special protection do I get if I buy goods or services using a credit card?

When you use a credit card to buy something both the 'lender' and the 'supplier'are resonsible for your purchase. This means that if anything goes wrong with the supplier you can get your money back from the lender. For example, if the goods are not delivered or are faulty, you can claim your money back from either the lender or the supplier. This could be useful if, say, the supplier goes bust. You are entitled to this protection by law (under Section 75 of the Consumer Credit Act 1974), but there are exceptions. The credit card company is only liable for items of goods or services costing more than £100 and up to £30,000. It's also worth remembering that this protection only covers credit cards. It doesn't apply to other types of plastic card (such as charge cards and debit cards).

Find out more about protecting your self from Credit Card Fraud here.

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