apr explained, finally

WTF is
‍APR?!

You're thinking that’s the interest rate you’ll pay each month, right? Not quite.

Here's our Chief Risk Officer in a bubble bath to explain.

THAT BIG NUMBER PROBABLY ISN'T WHAT YOU THINK IT IS.

This is some text inside of a div block.

Look, we don’t blame you. It’s all pretty confusing. Basically, it’s an annualised percentage that includes the interest rate and fees, and it’s designed to reflect the total cost of borrowing for a majority of people. Here's what it's made up of.

Monthly purchase rate

Our Full Membership shows an annualised rate which is converted into a monthly rate when you borrow.

monthly fee

This covers benefits like cashback, travel insurance and other benefits and is common for rewards cards.

HERE'S AN EXAMPLE TO SHOW HOW INTEREST REALLY WORKS

£100

If you borrow this

You left £100 on your balance from the month before

about

£2.20

You'd pay this interest

Plus the £100 you borrowed from the month before

not

£20+

It shouldn't be so tricky

We think interest rates should be easier to understand.

We think interest should be easier to understand.

Weren't expecting that, were you? That annualised percentage rate is converted into a monthly one when you borrow. Not so bad, right?

Don't worry, no one really gets this stuff.

this whole apr and interest thing could be a lot clearer.

We surveyed 2,000 people in the UK and the results were... less than inspiring.

94%

of people don't know what Representative APR includes. Eeesh.

64%

think you pay interest, even if you pay off your card in full every month.

84%

don't know that Representative APR includes fees that cover card benefits.

Still unsure?

Ask us anything

Do I pay interest if I pay off my card in full each month?

Nope! If you pay off your credit card each month in full, you'll pay no interest. You'd be surprised how many people think this!

Why is this all so confusing?

These rules are in place to help you understand the cost of borrowing. So don’t get mad at us. But yeah, we agree: there’s room for improvement. So we’re trying to do a better job explaining what this all really means so you know exactly what you’re getting—in clear, simple terms. No surprises. Fewer angry comments online.

Why is your Representative APR so high?!

Good question. We get this a lot. It’s all pretty confusing. That big number you’re seeing, it’s called a Representative APR. It’s an annualised percentage that includes the interest rate and fees, and it’s designed to reflect the total cost of borrowing for a majority of people. It’s a bit of a mouthful… so here it is broken down:

An annualised percentage that shows the total cost of borrowing
That includes the purchase rate and monthly fees
Calculated based on what a majority of people would get
It's not the interest rate you'd get

How much interest would I pay if I borrowed £100?

Here’s an example using some imaginary numbers. Let’s say you borrow £100 with a 20% interest rate. Now, you might think that means you’ll pay £20 every month, but that’s not how it works. That 20% is annualised, meaning it’s spread out over the whole year. So if you borrow for just one month, they take that rate and turn it into a monthly one, which is about 1.5%. So, that’s £1.53 in interest, not £20.

Why is your Chief Risk Officer in a bath?

Really can't un-see it, can you? Sorry about that.