Question

Which situation is best? a. Having $3,280. 00 in a savings account earning a 4. 25% APR and $1,320. 00 due on a credit card with a 13. 5% APR

b. Having $2,013. 85 on a credit card with a 9. 85% APR

c. Having $524. 85 on a credit card with a 8. 4% APR and $790. 00 in a savings account at a 4. 35% APR

d. Having $1,040. 00 on a credit card with a 4. 9% APR

Answer 1

Answer: The best situation is #1, having $3,280.00 in savings account earning a 4.25% APR and $1,320.00 due on a credit card with a 13.5% APR. I just took the test, and this was the correct answer.

Explanation: Interest Accrued: ($3,280.00)(0.0425)(1/12) = 11.62

Interest Accrued: ($1,320.00)(0.135)(1/12) = 14.85

Take in consideration for number #1 that there are plenty in savings with low interest, enough for you to pay off the credit card and still have money left.