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A new credit card holder must decide between two credit cards. The first card offers a current APR of 14.99%. The second card has a current daily periodic interest rate of 0.038%. Which card would be the better choice?

The first card is the better choice because the daily periodic interest on the first card is 0.038%, compared to 0.041% on the second card.
The first card is the better choice because the daily periodic interest on the first card is 0.041%, compared to 0.038% on the second card.
The second card is the better choice because the daily periodic interest on the first card is 0.038%, compared to 0.041% on the second card.
The second card is the better choice because the daily periodic interest on the first card is 0.041%, compared to 0.038% on the second card.

1 Answer

6 votes

Answer:

The answer to your problem is, D. The second card is the better choice because the daily periodic interest on the first card is 0.041%, compared to 0.038% on the second card.

Explanation:

Our daily periodic rate is =
(APR)/(365) %

For the first card it can be represented as, ( daily periodic rate equaling )


(14.99)/(365) = 0.041%.

For the second it can be represented as, ( daily periodic rate equaling )

0.038%. We know because it can be given.

Compare them; 0.041% > 0.038% ( by 0.003% )

Making Option D correct.

Thus the answer to your problem is, D. The second card is the better choice because the daily periodic interest on the first card is 0.041%, compared to 0.038% on the second card.

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