The one number
What's the real APR on that fee?
The short version
APR is the yearly cost of borrowing, written as a percent — so any fee compares to any other.
- It lets you weigh a $5 fee against a 24% credit card and know which is dearer.
- The math: fee ÷ amount, times 365, divided by the days you had the money.
- A $5 fee on $100 for 7 days is 261%. The same $5 on $1,000 for 90 days is 2%.
- The catch: a small fee on a small, short loan is almost always expensive.
APR = ( fee ÷ amount ) × ( 365 ÷ days ) × 100
Run the numbers
Simple annualization · the method used in Truth in Lending disclosuresInclude tips, express charges, and membership fees.
Effective APR
261%
Common fees, translated
Real-world charges as the yearly rate they represent — cheapest to dearest.
| The charge | Effective APR | What it means |
|---|---|---|
| $9 admin fee on a $600 credit-builder loan, 12 months | 2% | Cheap — small fee, long term. Lowest |
| $20 credit-union application fee on $500, 6 months | 8% | Below most credit cards. Time does the work. |
| $3.99 instant-transfer fee on a $200 advance, 14 days | 52% | Above any card, for a fee that buys only speed. |
| 5% cash-advance fee on $250, 30 days | 61% | And that's before the card's own interest. |
| $5 tip on a $100 advance, 7 days | 261% | An optional tip can cost more than a payday loan. |
| $35 overdraft fee on a $300 shortfall, 14 days | 304% | Close to payday-loan territory. |
| Payday loan at $15 per $100 on $300, 14 days | 391% | The benchmark everything else is measured against. |
| $30 late fee on a $200 buy-now-pay-later plan, 14 days | 391% | Payday-loan rate, on a plan sold as interest-free. |
| $35 overdraft fee on a $50 shortfall, 5 days | 5,110% | The smaller the gap, the worse the rate. |
⚠ Two things this number does and doesn't tell you
What it tells you: whether a habit is affordable. If you wouldn't borrow at 391% for a year, don't do the thing that costs 391% every two weeks. Repeated often enough, they're the same transaction.
What it doesn't: whether tonight is affordable. A 5,110% APR on a $35 overdraft is still only $35. For a genuine one-off, the dollar figure is what matters. Anyone who shows you only one of these two numbers is selling something.
✓ Trust the APR when
- You're choosing between options.
- The charge repeats, payday after payday.
- You want a $5 fee and a 24% card made comparable.
✕ Look past the APR when
- It's a true one-off you'll never repeat.
- A short term inflates the percentage though the dollars are small.
- Read both columns — rate and dollars — before you decide.