rabjohnamanda
Answered

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Credit card A has an APR of 22% and an annual fee. All else being equal, at about what balance will the cards offer the same deal over the course of a year? (Assume all interest is compounded monthly)

Sagot :

anthougo

All else being equal, at a $1,333.33 balance, the two credit cards will offer the same deal (finance charge) over a year.

What is a credit card finance charge?

A credit card finance charge is the fee associated with using credit.

Credit card issuers use the finance charges to minimize non-payment risks and earn some profits for extending credit to cardholders.

Data and Calculations:

                   Card A         Credit B

APR              22%               25%

Annual fee  $40                $0

To calculate the balance required, the required equation is

= 22%x + $40 = 25%x

Where x = required balance

Thus,

= 0.22x + $40 = 0.25x

= $40 = 0.03x (0.25x - 0.22x)

= 0.03x = $40

x = $40/0.03

x = $1,333.33

Question Completion:

Credit card A has an APR of 22% and an annual fee of $40, while credit card B has an APR of 25% and no annual fee.

Thus, all else being equal, at a $1,333.33 balance, the two credit cards will offer the same deal over the course of a year.

Learn more about credit card finance charges at https://brainly.com/question/22717601

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