Question

Tom has two credit cards and is planning on purchasing a racing bicycle that will cost $450. If Tom charges the bike to one of his credit cards, which card will take the longest to pay off if he only makes the minimum payments?

Card A: APR 16%, annual fee: $40
Card B: APR 21%, annual fee: $35

Card A because it has a lower APR
Card A because it has a higher annual fee
Card B because it has a higher APR
Card B because it has a lower annual fee

Answer 1

So for this problem, we'd need to figure out which card would be more expensive for the bike on an annual basis.
The bike costs $450; 16% of this is $72; 21% of this is $94.5, for the first and second card, respectively
Next, we add the interest on the card to the fixed rate. For the first card, we get 72 + 40
For the second card, we get 94.5 + 35.
Now, which card is more expensive and, therefore, takes longer to pay off?

Answer 2

@SmokeyBrown Clear and understandable, thanks smokey! C:

Answer 3

I'm glad I could help! Thanks for the kind words