APR and EAR

These strange acronyms are often seen following the headline rates for current and savings accounts, overdrafts, loans and credit card charges.

APR stands for annual percentage rate. It is the rate of interest that is paid or must be paid on the money that is being held in an account or has been borrowed. It was designed to let consumers compare rival credits cards' and other products' interest rates on a like-for-like basis.

EAR stands for equivalent annual rate and is usually associated with overdrafts. It is calculated like the APR figure but because it is used for money being borrowed, it predicts the level of cash owed in the future.

Basically, the higher the figure, the more you will pay, and over a year, this can mount up.