Question

Nick used his credit card to make several large purchases, and now owes the credit card company $4,273 plus 32% interest. His mother gave him $500 for his birthday. Which is the most responsible choice he can make regarding his birthday money?

A.
He can use all the money to pay down his credit card debt.

B.
He can invest $200 in the stock market and pay down his credit card debt with the rest.

C.
He can put $250 into a savings account that pays 3.8% interest and pay down his credit card debt with the rest.

D.
He can put all the birthday money in the 3.8% savings account.

Answer 1

Explanation:

A, because more debt would build up for your credit card if you added money to a savings account since you would have to wait a whole year to get interest back. And it wouldn't be B because it simply would not be worth it to invest in stocks while in debt. Also, I just took the test and got it right!