Question

Sarah is buying a new washer and dryer. She has the cash to pay for the appliances. But, she wonders if she should use all of her cash or use a credit card. What advice would you give Sarah?

Use money from savings because large purchases should always be made with cash.

Open a new credit card account because she is offered a new introductory APR.

Use a credit card because the minimum payments will be lower than the cost of the washer and dryer.

Use a credit card because it can offer protection if something should happen to the washer and dryer.

Answer 1

C is definitely false because paying the minimum payment will only draw out things and make the total cost more expensive in the long run

Answer 2

you also run the risk of defaulting at some point if you rely on paying the bare minimum

Answer 3

So which one? :/

Answer 4

hmm well B is a bad idea because sure you get a great introductory APR

BUT

that interest rate will go up (probably very high too) and that might catch you off guard and you may default

Answer 5

so B is out

Answer 6

I'm not sure what they mean in terms of "protection" for choice D

but if she has the cash, then she should just pay for it in cash (all cash, no credit) because

a) it will be paid off in full (so she won't have to worry about payments and such)

b) it will be cheaper than financing

the only downside is that paying in all cash won't improve Sarah's credit score, but oh well

Answer 7

So could it be D?

Answer 8

hmm now that I think about it, you would have to purchase a warranty or some kind of insurance to get whatever "protection" you needed

so that would cost you extra...add that to the cost of credit and the cost gets even worse

Answer 9

so D is definitely a bad idea if you want "protection"

Answer 10

better to buy a warranty or purchase insurance

Answer 11

or extended warranty

Answer 12

So which option? :/

Answer 13

I've eliminated all but one, go back and see which ones I've eliminated