You are considering applying for one of two credit cards. Credit card "A" has an annual fee of $30 and charges interest of 10%. Credit card "B" has no annual fee, but charges an interest rate of 15%. If you carry an average balance of $500 on your credit card, the lowest total annual expenses you could have with one of these two credit cards would be
A) $50.
B) $80.
C) $75.
D) $90.

Question

Quizplus · Accepted Answer

Credit card "A" has an annual fee of $30 and charges 10% interest on a $500 balance, which is $50 in interest. Total cost = $30 + $50 = $80. Credit card "B" charges 15% interest on a $500 balance, which is $75 in interest. Total cost = $75. Therefore, the lowest total annual expenses would be with credit card "B" at $75.

You Are Considering Applying for One of Two Credit Cards