Question

Most credit card offers use compounding interest. This is usually called the annual percentage rate, or APR. When the interest is compounded frequently

Answer 1

When the interest is compounded frequently the balance grows faster.

Step-by-step explanation:

As you saw in the question above, most credit cards use compound interest. This means that this card will charge a certain amount in relation to the value of the purchases you made using the card. For you to understand better, let's cite an example:

Let's say that your credit card charges a 10% fee on the amount of your invoice. Thus, if your bill is 100 dollars and you have not paid, next month the 10% interest will be applied to your debt and your bill will cost 110 dollars. If you do not pay again, you will be charged an additional 10% fee on your new debt and you must pay $ 121.

In summary, we can say that when the interest is compounded frequently the balance grows faster.

Answer 2

Simple interests are only calculated on the principal, which is good for the borrower, and good but not so great for the lender.

Now since Compound Interests are calculated on the principal moreover on the already earned interests according to each period, it's a great deal for the lender due this is: "interests on interests" thus the balance grows faster and the wealth grows exponentially, but not so good for the borrower due they end up paying more; wherefore they're advised to opt for wider periodicity on cards accordingly, because when the interest is compounded frequently the balance grows faster.

Step-by-step explanation: