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Bobby is trying to decide between two credit cards. One has no annual fee and...

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Question

Accounting

Bobby is trying to decide between two credit cards. One has no annual fee and an interest rate of 18 percent, and the other has an annual fee of $35 and an interest rate of 8.2 percent.

(a) If Bobby pays his credit card balance in full each month, which card should he choose?

multiple choice 1

  • He should select the card without the annual fee.

  • He should most likely select the card with the lower interest rate.

(b) If Bobby just pays the minimum payment and carries a balance from one month to the next, which card should he choose?

multiple choice 2

  • He should most likely select the card with the lower interest rate.

  • He should select the card without the annual fee.

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