# APR calculation.

I know this is a dumb question but how does one calculate an APR for a
credit card?
The credit card research used to say, but they have gone AWOL.
with a great deal of practice ;0)
Whatever way gives you the figure you are looking for.
[(Monthly interest rate as a decimal plus one) to the power of 12] minus 1 gives the apr.
To get the decimal interest rate just divide the % by 100. Daily rates can be found in a similar way.
The calculations end up being approximations when there are interest free periods or one-off charges (like for cash advances).
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In message , David Z writes
The basic 'compound interest' formula wont work for credit cards because of the initial 'interest free' period and the possibility of other one off charges.
My preferred method, stated here many times, is to calculate the rate of interest which, when applied to a Net Present Value calculation of a cash flow consisting of all the payments on the card until the advance is repaid, provides a NPV which equals the amount lent. There are other ways though, see
/oft144.pdf
(Note this isnt a domain name which I am trying to sell)
No mention of NPV there though (they just call it PV) and surely a government site must be authoritative...
In message , dp writes
Of course it is! Hence me posting the link.
But wouldn't it be great if there was a site that actually calculated NPV (or PV as the authoritative site calls it) for a set of payments rather than just saying how to calculate it. I would knock something together myself but I get shot down every time I put something onto the internet...
In message , dp writes
Yes, but there are a number of different ways according to the scenario. I'm sure it would easy enough as it is based around a simple formula that can be found in most spreadsheets.
Thats only because you try to sell the domain name.

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