Definition
Interest rate that indicates the effective cost or yield of a financial product. The APRC is calculated according to a standardized mathematical formula that takes into account the nominal interest rate of the operation, the frequency of payments (monthly, quarterly, etc.), bank fees, and some operation expenses.
Further information
In the case of loans, certain items are not included in the calculation of the effective cost, such as expenses that the client can avoid by exercising the rights granted by the contract, expenses that must be paid to third parties, or expenses for insurance or guarantees (except for certain types and only if the entity requires their subscription for the granting of the loan).
The main differences between the APRC and the nominal interest rate (NIR) arise in two ways. Firstly, the APRC incorporates certain fees and expenses. Secondly, the APR takes into account the frequency of payments. It is not equivalent for payments to be made monthly or once a year, for example. In the case of monthly payments, the situation is more costly for the creditor (and therefore, the APR will be higher than the NIR for this reason). If, for example, there are no fees or expenses and payments are made once a year, the APR will be similar to the NIR.
General notes to the statistics on interest rates applied by MFIs to euro area residents.
Related concepts
- Interest rates of Monetary Financial Institutions
- Reference interest rate
- Fixed interest rate
- Nominal interest rate
- Variable interest rate
- Interest rate
References
Legal frame
- Guideline (EU) 2017/148 of the European Central Bank of 16 December 2016 amending Guideline ECB/2014/15 on monetary and financial statistics (ECB/2016/45).
- Guideline (EU) 2021/830 of the European Central Bank of 26 March 2021 on balance sheet item statistics and interest rate statistics of monetary financial institutions (ECB/2021/11)
- Circular 1/2010 de 27 de enero, del Banco de España, a entidades de crédito, sobre estadísticas de los tipos de interés que se aplican a los depósitos y a los créditos frente a los hogares y las sociedades no financieras. (Circular 1/2010 of January 27, from the Banco de España, to credit institutions, on statistics of interest rates applied to deposits and loans to households and non-financial corporations).
- Regulation (EU) No 1072/2013 of the ECB, 2013/34, on the statistics of interest rates applied by monetary financial institutions.
- Regulation (EU) No 756/2014 of the ECB, 2014/30, on the statistics of interest rates applied by monetary financial institutions.
- 2014/810/EU: Guideline of the European Central Bank of 4 April 2014 on monetary and financial statistics (recast) (ECB/2014/15).
Links to data tables
Update date: January 2025
