AnswersTX-Personal Financial Literacy and Economics3.7 How Credit WorksQuestion 1
1
QuizMultiple Choice

3.7 How Credit Works

Question 1 • TX-Personal Financial Literacy and Economics

Solomon is a college student who needs a good-quality computer for his schoolwork. He wants to apply for a credit card to cover the cost. Solomon is considering two different cards. One card has an APR of 12% while the other card has a variable APR between 10% and 15%.What other information does Solomon need to make an informed decision?

Answer
A
the taxes associated with each card
B
the late fees associated with each card
C
the type of collateral associated with each card
D
the annual percentage rate associated with each card

Explanation

The cards’ APRs are already given: one is 12%, and the other varies from 10% to 15%. To compare the full cost of borrowing, Solomon should also check what each card charges if he makes a late payment. Therefore, the best answer is the late fees associated with each card.

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