Final answer:
The yearly fee charged by credit card companies for the convenience of the credit card is called the annual fee. This is different from the interest rate, which is a percentage cost of borrowing money on the card. The correct option is 2.
Step-by-step explanation:
The yearly fee that is charged by the credit card company for the convenience of the credit card is known as the annual fee. This is separate from the interest rate, which is the cost of borrowing money on the card.
While interest rates can vary and often range from 12% to 18% annually, annual fees are fixed amounts charged by some credit card companies irrespective of card use and balance. These fees cover a range of amenities provided by the card issuer, such as rewards programs, and the security and convenience associated with the card.
In the context of the market for borrowing money using credit cards, cardholders need to manage both annual fees and interest rates efficiently in order to minimize costs. Missing a payment could result in additional fees for late payments on top of the accrued interest.