APR (Annual Percentage Rate)

APR — Annual Percentage Rate — is the yearly cost of carrying a balance, written as a percentage. A card with a 22.99% APR isn’t charging you 22.99% once a year; it’s charging a fraction of that rate every billing cycle, and 22.99% is what that fraction adds up to across twelve cycles.

How it turns into a monthly charge

For most revolving accounts, one common approximation divides APR by 12 to get a monthly rate, then applies that rate to the balance before that month’s payment. A $2,000 balance at 22.99% APR accrues roughly $2,000 × 22.99% ÷ 12 ≈ $38 in interest that month, before your payment is subtracted.

Federal student loans typically work differently: interest accrues daily — balance × rate ÷ 365 — for each day that passes, rather than compounding monthly. The same APR number produces a slightly different dollar amount depending on which of these two methods applies, and how many days are in the billing period.

Where it matters most

APR is the single biggest lever in how long a balance takes to clear and how much interest it costs along the way — more than the size of the balance itself, in many cases. Two people with identical balances and payments, but different APRs, can pay wildly different amounts over the life of the debt.

What Kalco does with it

You enter the APR your statement shows. Kalco does not verify it against your lender, detect a rate change, or infer whether a rate is promotional, variable, or about to reset — the figure you enter is the figure the projection uses. See minimum payment for the other number that, together with APR, determines how fast a balance moves.