Question

Which best describes interest?

a. Interest is another word for the cash and rewards you get from using certain credit cards.
b. Interest is a method by which you can compare the cost of comparable purchases.
c. Interest is the cost associated with using credit and it ultimately makes any purchase made using credit more expensive than the same purchase made with
cash
d. Interest is the fee associated with using more credit than the limit on your credit card.

Answer 1

c. Interest is the cost associated with using credit and it ultimately makes any purchase made using credit more expensive than the same purchase made with cash.

Step-by-step explanation:

Interest is the cost of borrowing money. It is the added amount paid over and above the principal amount. Goods and services purchase on credit will end up costing more than when bought cash.

Interest also represents the risk of lending money. Lenders make money by charging interest on credit extended. It means borrowers pay more than the amount borrowed.

Interest is expressed as a percentage. The higher the percentage, the more expensive is the credit facility.