APR (annualized interest rate) is the abbreviation of annual interest rate, which represents the percentage of interest or income generated by loans or investments within one year. Why divide APR by 12? This is because there are 12 months in a year. Divide the annual interest rate by 12 to get the monthly interest rate, which is convenient for calculating and comparing the interest or income in different time periods.

Extended content: dividing APR by 12 is a common practice to convert annual interest rate into monthly interest rate. The advantage of this is that it is more convenient to calculate loans or investments. For example, suppose the annual interest rate of a loan product is 12%. If you don't divide by 12, you can directly use 12% to calculate the monthly interest, and you will get a higher value. After dividing by 12, the monthly interest rate is 1%, which more accurately reflects the amount of interest generated each month.

The operation of dividing by 12 can also help us to convert the annual interest rate into interest rates in other time periods, such as dividing the annual interest rate by 4 to get the quarterly interest rate and dividing it by 6 to get the semi-annual interest rate. In this way, interest rates can be calculated and compared more flexibly according to actual needs, so as to better manage loans or investments.