Suppose Bank of Grayslake offers a credit card charging 1.4% per month of one's average daily balance and no annual fee. The Bank of Gurnee offers a credit card charging 1.25% per month and
An annual fee of $X. What value of $X would make both cards the same if your average daily
Balance is usually $1200?

Question

Quizplus · Accepted Answer

The monthly interest for Bank of Grayslake is 1.4% of $1200, which is $16.80. For Bank of Gurnee, the monthly interest is 1.25% of $1200, which is $15. To make both cards the same, the annual fee $X should equal the difference in monthly interest over a year: ($16.80 - $15) * 12 = $21.60.

Suppose Bank of Grayslake Offers a Credit Card Charging 1