Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the interest is compounded frequently, A) the APR will increase steadily over time. B) balances on the credit card grows faster. C) cash advance limits on the credit card decrease over time. D) the company receives less profit from the credit card balance.

Question

Thaddeus Bray

Social Studies

19 October, 12:07

Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the interest is compounded frequently, A) the APR will increase steadily over time. B) balances on the credit card grows faster. C) cash advance limits on the credit card decrease over time. D) the company receives less profit from the credit card balance.

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Answers (2)

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Ellie Beasley · Answer 1

Compounding interest is basically putting interest on interest, so it isn’t pleasant when it happens on a credit card. I would answer with B, because most credit cards today compound interest daily, so compounding frequently can increase your debt quite quickly, especially if you carry a higher balance on your card.

Esther Huber · Answer 2

The company receives less profit from the credit card balance