Because of the compounding effect
A) people with high credit scores often have difficulty obtaining loans.
B) people with low credit scores often have difficulty obtaining loans.
C) a small loan balance becomes large.
D) a large loan balance becomes smaller.

Question

Quizplus · Accepted Answer

The compounding effect causes interest to be calculated on the initial principal, which includes all accumulated interest from previous periods, leading to a small loan balance growing larger over time.

Because of the Compounding Effect