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Why a credit card is different from a direct loan in terms of interest?

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Final answer:

A credit card is different from a direct loan in terms of interest because they have different structures and repayment terms. With a credit card, you have a predetermined credit limit and are only required to make a minimum payment each month. A direct loan is a fixed amount of money that you borrow upfront and must repay over a set period of time with fixed monthly payments.

Step-by-step explanation:

A credit card is different from a direct loan in terms of interest because they have different structures and repayment terms.

With a credit card, you have a predetermined credit limit that you can borrow against. You can make purchases or take cash advances up to that limit, and you are only required to make a minimum payment each month. If you choose not to pay the full balance, the remaining balance will accrue interest at the credit card's interest rate.

On the other hand, a direct loan is a fixed amount of money that you borrow upfront and must repay over a set period of time, typically with fixed monthly payments. The interest rate for a direct loan is usually lower than a credit card's interest rate, and you are required to make regular payments until the loan is fully paid off.

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