Glossary: Applied interest rate
This is the rate of interest a lender uses to calculate how much you owe it. The applied interest rate figure will be slightly lower than the APR as it doesn’t include all fees and charges; so, for a consumer, the APR is a more accurate measure of the rate you pay on borrowing.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.