It will take Cody 3 months to save up enough money to purchase a stereo. He has a credit card with a 12% interest rate. Cody’s f

Question

3 years ago

12

It will take Cody 3 months to save up enough money to purchase a stereo. He has a credit card with a 12% interest rate. Cody’s f

riend Mark says it will cost Cody less money if he saves for 3 months instead of using the credit card. Is Mark correct?

Business

2 answers:

Alchen [17] · Answer 1 · 2022-07-27T14:48:55+03:00

Answer:

Mark is correct.

Explanation:

If Cody saves for three months, he will not incur any other cost apart from the purchase price of the stereo. Cody may even earn some interest on the savings depending on his type of account.

The use of a credit card is incurring a debt. The credit card debt is usually among the highest in the market. It calculates interests monthly. If Coby purchases the credit card, he will pay three months' interest on the credit.

The savings option will cost less money because it eliminates interest payments.