Glossary
APR: definition
APR, the annual percentage rate, is a standardised way of stating the yearly cost of borrowing, including certain fees. It is a borrowing concept. It is not the return you should expect from an investment with the same headline number.
In practice
Lenders use APR so that interest and some compulsory charges can be compared. The calculation assumes a pattern of borrowing that may not match a margin loan that rises and falls with a portfolio. Investment products sometimes quote APR-like figures for lending or for a credit feature attached to an account. Read whether you are the borrower. If you are, the APR is a cost. If someone offers you an APR as a return, they are describing a loan you would be funding, with default risk that a bank deposit does not have.
A worked example
A margin loan advertised with an APR is the price of borrowing against shares. It is not added to the share’s return. It is subtracted from it, and the collateral can still be sold if the shares fall.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- Financial Conduct Authority — checked 2026-10-13
- Investor.gov — checked 2026-10-13