Question

Harriet pays her credit card bills in full whenever she can. Explain why a credit card that offers a 26% APR with an annual fee of $150 and 4% cash-back on all purchases is better for Harriet than a credit card that offers a 15% APR with an annual fee of $150 and 3% cash-back on all purchases.

Answer 1

The better credit card for Harriet is the one offering 4% cash-back and 26% APR because she pays off her balance in full, making the higher APR irrelevant, and she gets more cash-back rewards.

Step-by-step explanation:

The subject of the question involves comparing two credit card offers to determine which is more beneficial for Harriet, who pays her credit card bills in full whenever possible.

Given that Harriet pays off her balance regularly, the annual percentage rate (APR) is less of a concern for her than the cash-back rewards.

The first credit card option offers a 26% APR with a $150 annual fee and 4% cash-back on purchases, while the second option offers a 15% APR with the same annual fee but only 3% cash-back.

Even though the first card has a higher APR, it is the better option for Harriet because she pays off her balance and thus avoids interest charges, and the higher cash-back percentage offers her greater financial rewards on her purchases.