Finance glossary
Total Charge for Credit
Also known as: Cost of credit
In simple terms
The total charge for credit is everything you pay to borrow, on top of the amount you actually borrowed — all the interest and compulsory fees added together.
On this page
What does total charge for credit mean?
The total charge for credit is the sum of all the costs of borrowing — the interest plus any compulsory fees and charges you must pay to get and keep the credit. It does not include the amount you borrowed itself.
Add the total charge for credit to the amount borrowed and you get the “total amount payable” — the full sum you will hand over by the end of the agreement.
How the total charge for credit works
It is the figure that underpins the APR: the APR is essentially the total charge for credit expressed as a standardised yearly percentage. Both must be disclosed for regulated consumer credit.
Compulsory costs — such as an arrangement fee or an account-maintenance fee — count towards it. Optional extras, like an add-on insurance you chose to buy, and default charges you would only pay if you missed a payment, generally do not.
How could this affect me?
The total charge for credit tells you, in pounds and pence, exactly how much borrowing is costing you — which can be more meaningful than a percentage. On a long loan, a modest-looking rate can still add up to a large charge.
When comparing deals, look at both the APR and the total charge for credit (or total amount payable). A lower APR does not always mean a lower total cost if the terms or fees differ.
Things to watch out for
- A low monthly payment can still mean a high total charge for credit over a long term.
- Optional add-ons are not usually part of it — but you still pay for them.
- Compare the total charge for credit as well as the APR when choosing a deal.
- Default charges are excluded, so the real cost can rise if you miss payments.
Know your rights
- For regulated consumer credit, lenders must disclose the total charge for credit, the total amount payable and the APR before you sign.
- You are entitled to clear pre-contract information under the Consumer Credit Act 1974 and FCA rules.
- If you believe the cost was not made clear, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- FCA, CONC App 1 — total charge for credit and APR (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Understanding the cost of borrowing (opens in a new tab). Accessed 22 Aug 2026.