Credit Card A Offers An Introductory Apr Of 7.6

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Question

Credit card A offers an introductory APR of 7.6% for the first 3 months and a standard APR of 23.4% thereafter, while credit card B offers an introductory APR of 7.9% for the first 3 months and a standard APR of 22.9% thereafter. All else being equal, which of these statements is correct? (Assume all interest is compounded monthly.) A. Credit card B is the better deal over the course of the first 3 months and over the course of the first year. B. Credit card B is the better deal over the course of the first 3 months, but credit card A is the better deal over the course of the first year. C. Credit card A is the better deal over the course of the first 3 months and over the course of the first year. D. Credit card A is the better deal over the course of the first 3 months, but credit card B is the better deal over the course of the first year.

Answer

AnswerD. Credit card A is the better deal over the course of the first 3 months, but credit card B is the better deal over the course of the first year.ExplanationAn Introductory rate is low rate given by credit card companies to its clients as an incentive for card application. An introductory APR with a 0% offer simply means that a person is not required to pay interest on his or her purchase for a particular period of time. Introductory APR could last from 6 to 12 months. For  the first 3 month, card A (7.6%) offers a better deal than card B(7.9%). Over the course of the year, card B(22.9%) offers a better deal than card A(23.4%)

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