Question

Q 8.3: When would a credit card holder be entitled to lower interest charges? A : When the card company calculates finance charges from the date of purchase to the date the amount is paid. B : When the card company allows cardholders to skip payments on their cards. C : When the card company allows a grace period before interest is accrued. D : When the card company states interest as a monthly percentage rather than an annual percentage.

Answer 1

Answer: Option  C  

       

Explanation: The given question relates to the concept of time value of money which in simple words states that the value of money decreases over time. The value of a dollar today will be less than tomorrow.

Hence if a card holder gets grace period to pay the interest before the interest accrues than it means he actually gets to pay lower interest that he could have paid before.

Hence from the above we can conclude that the correct option is C.