Your parents have 3 credit cards. Each has its entire credit line used, and the credit limits are $1,800.00, $2,600.00, and $3,500.00. Paying off and closing which card would increase your parents' debt ratio the most?

Question

Hana Ford

Mathematics

14 October, 18:37

Your parents have 3 credit cards. Each has its entire credit line used, and the credit limits are $1,800.00, $2,600.00, and $3,500.00. Paying off and closing which card would increase your parents' debt ratio the most?

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Answers (1)

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Brice · Answer 1

Paying off the and closing the lowest credit limit of $1800.00 will increase my parent's debt ratio the most. The debt ratio is computed as debt over the asset. Debt is directly proportional to debt ratio thus, paying off the lowest debt will lead to highest debt and in turn highest debt ratio.