When you look at a loan offer, you will see two percentage figures: the nominal interest rate and the RRSO (Poland's official name for the annual percentage rate, or APR). Sometimes they are close together, sometimes they differ by several percentage points. That is not a mistake - they measure two different things. You do not need any finance background to understand this - a few minutes and one simple example will do it.
What the nominal interest rate is
The nominal interest rate is the percentage a bank uses to calculate the interest charged on the amount you borrow. It is usually the number printed in large letters in adverts, because it looks appealing. But the nominal rate does not include extra costs of the loan, such as a one-off arrangement fee (a commission charged for granting the loan), a compulsory insurance charge, or the cost of running an account if the bank requires one. It is only one part of the total cost, not the whole cost.
What RRSO actually is
RRSO stands for "Rzeczywista Roczna Stopa Oprocentowania" - literally, the real annual interest rate. It works the same way as the APR you may know from other countries. It is a single figure into which the bank must fold every cost of the loan: interest, the arrangement fee, any compulsory insurance, and any other charge you must pay to get the loan. That makes RRSO the number that lets you compare offers from different banks on equal terms - as if every offer were calculated with the same formula. Banks are legally required to display RRSO in any advert that mentions a rate or cost figure for a loan.
Why RRSO is always equal to, or higher than, the nominal rate
RRSO is never lower than the nominal interest rate. It can only be equal to it when a loan carries no extra fees at all - which is rare. In practice, almost every loan comes with some fee or commission, so RRSO ends up higher, sometimes considerably higher. The more extra costs a bank adds, the bigger the gap between the two numbers. A low advertised nominal rate does not automatically mean a cheap loan.
A worked example
Say you take a cash loan of 10,000 zloty for 12 months, with a nominal interest rate of 7% a year. The interest itself costs roughly 700 zloty over the year, in simple terms. On top of that, the bank charges a one-off arrangement fee of 500 zloty, deducted straight from the amount paid out to you. Once that fee is spread across the loan term and added to the interest cost, the RRSO for this loan could come out at around 12-13% - even though the nominal rate is only 7%. That gap is the cost of the fee, hidden inside the second number. This is why RRSO, not the nominal rate, tells you what a loan will really cost you.
If you want to see how RRSO compares across current loan offers, you can find a ranking on our loan comparison page.