Final answer:
To calculate the effective interest rate for Jay's credit card, with an APR of 16.53%, the compounding frequency is required. Without it, the exact effective annual rate cannot be determined. The effective rate is higher than the nominal APR due to compounding.
Step-by-step explanation:
To determine the effective interest rate on Jay's credit card with an APR of 16.53%, we would need to know how often the interest was compounded throughout the year. The nominal APR is the rate of interest charged without taking compounding into account. However, when interest is compounded periodically, the actual interest paid over the year can be higher than the nominal rate.
Since the student's question does not specify the number of times compounding occurs per year, it is not possible to accurately calculate the effective annual rate (EAR) without this information. In general, the effective annual rate is calculated using the formula EAR = (1 + APR/n)^n - 1, where 'n' is the number of times interest is compounded per year.