What does 24.9% APR actually mean?
You see “24.9% APR” on every credit card ad. But what does it cost you in actual pounds?
The simple version
APR is the yearly price of borrowing. At 24.9%, every £1 you owe costs roughly 25p a year — and that interest is added to what you owe, so next month you pay interest on the interest.
In real life
Sam puts a £2,500 sofa on a card at 24.9% and pays £100 a month. It takes him over 2½ years to clear, and he pays around £900 on top of the sofa price.
Move the sliders. Watch the coral bar — that's the interest.
Time to clear
2 yr 11 mo
Interest paid
£901
You'd repay £3,401 in total — £901 more than you borrowed.
Your move
You owe £1,500 at 24.9%. Which move saves you the most?
Key takeaway
APR is the real price tag on borrowing. The higher it is, the more your payment should be above the minimum.
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