Question

Aljaquan currently has $1,000 in his bank account. He wants to purchase a new bike for $1,500. Since he does not have enough money right now, he wants to purchase it with his credit card. Should Aljaquan make this purchase? Why or why not?

Answer 1

Aljaquan should carefully consider his financial situation and the implications of using his credit card for the bike purchase. If he can repay the balance quickly and manage any associated costs, it might be a reasonable option. However, if he cannot pay it off promptly, he may want to explore alternative ways to finance the purchase or consider saving up for it over time.

Step-by-step explanation:

Answer 2

Credit cards can be a convenient way to make purchases, but it’s important to consider the interest rates and fees associated with them. According to The Balance, credit card debt usually comes with high interest rates compared to other forms of debt 1. Therefore, if Aljaquan is unable to pay off the balance on his credit card before the due date, he may end up paying more than the original cost of the bike due to interest charges.

However, there are financing options available that can help Aljaquan purchase the bike without having to pay the full amount upfront. For example, Bicycle Warehouse offers financing through their Freedom To Ride credit card, which provides up to 12 months of free financing on approved credit 2. Trek Bikes also offers financing options with payment plans ranging from 0% APR to 9.99% APR for 6-12 months based on credit 3.

If Aljaquan is confident that he can pay off the balance on his credit card before the due date or if he is able to secure financing with favorable terms, then he can make the purchase. However, if he is unable to pay off the balance on his credit card before the due date and is unable to secure financing with favorable terms, then he should consider waiting until he has saved enough money to purchase the bike outright.