A credit card bill shows a balance due of $2500 with a monthly interest rate of 1.53%. What is the EAR?
A) 18.36%
B) 19.99%
C) 22.92%
D) 25.49%

Question

Quizplus · Accepted Answer

The EAR (Effective Annual Rate) can be calculated using the formula EAR = (1 + monthly interest rate)^12 - 1. Plugging in the monthly interest rate of 1.53% or 0.0153, we get EAR = (1 + 0.0153)^12 - 1 ≈ 0.1999 or 19.99%.

A Credit Card Bill Shows a Balance Due of $2500