Read the information about two competing credit cards. Credit Card 1 Credit Card 2 Interest rate 0% introductory rate, then 13.8% after one year 12.1% Annual fee None No annual fee in the first year, then $30 each year thereafter Credit Card 1 would be the better option if the borrower had major expenses in the first year. Spent a lot of money in the second year. Used the card regularly in the long term. Carried a large balance in the long term.

Question

Eleanor Cain

Business

2 March, 23:16

Read the information about two competing credit cards. Credit Card 1 Credit Card 2 Interest rate 0% introductory rate, then 13.8% after one year 12.1% Annual fee None No annual fee in the first year, then $30 each year thereafter Credit Card 1 would be the better option if the borrower had major expenses in the first year. Spent a lot of money in the second year. Used the card regularly in the long term. Carried a large balance in the long term.

+3

Answers (2)

Know the Answer?

Alessandra Sanders · Answer 1

a. had major expenses in the first year.

Agustin Drake · Answer 2

a. had major expenses in the first year.

d. Carried a large balance in the long term.

If the borrower has major expenses in the first year, then Credit Card 1 will be a better option since it allows the borrower to repay the credit card balance without paying any finance charges. However, the borrower must repay the credit card balance by the end of the first year in order to take advantage of the introductory offer at 0% interest. If the borrower had a large unpaid balance over a long term, switching to credit card 1 from a previous credit card will give the borrower a chance to repay the outstanding balance. This option will be effective only if the borrower manages to repay the outstanding balance within the period the introductory offer lasts.