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Knowing your APR from your headline rates!

As more and more of the UK public look to improve their finances in 2009 it has never been more vital to ensure that you know your APR from your headline rates. The APR (annual percentage rate) is now the more commonly quoted figure, after serious intervention from the financial authorities, but headline rates often seem to grab consumers attention to the detriment of the more essential APR.

In effect the APR rate includes the basic interest rates on a loan, credit card or other financial instrument as well as basic charges which may be implemented by the provider. For example if you saw an APR of 15% quoted against a headline interest rate of 14% you may initially go for the lower "cost" product. However, you may find on further investigation that the lower rate product may also attract charges of over 1% a year which would then make the 15% APR rate (which includes all charges and annual interest rate) a cheaper alternative.

Everyone seems to assume that the "headline" figures you see quoted are the figures you will be charged when this is not always the case if you delve deeper.

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