Skip to content
← GlossaryBanking

APR — Annual Percentage Rate

Standardised figure that shows the annual cost or yield of a financial product including fees and term.

The APR (Annual Percentage Rate) — TAE in Spanish — is the figure regulators require on any loan, deposit or interest-bearing account so you can compare products side-by-side. It bundles the nominal interest rate, the associated fees and the term into a single annualised number.

For a loan, the APR shows the real cost: the higher, the worse. For an interest-bearing account or a deposit, it shows the annualised yield: the higher, the better.

Important: APR assumes constant conditions for a full year. If a deposit promotes a first month at 5% and drops to 1% afterwards, the final APR will be much lower than that 5% headline.