Question

Daniel is looking at two different credit card offers. Credit Card A will give him an APR of 22.45%. Credit Card B will offer will be 1.25% each month. Which the better deal?

Answer 1

Credit card B is a better deal

Explanation:

in order to compare both credit cards, we must either convert the APR into a monthly rate or the monthly rate to APR.

convert credit card A's APR to monthly rate:

= 22.45% / 12 ≈ 1.87%, which is higher than 1.25%, so credit card B is better

OR

convert credit card B's monthly rate to APR:

= 1.25% x 12 = 15%, which is lower than 22.45%, so credit card B is better