John receives two credit card offers in the mail. Credit Card A: 1% introductory APR, 19.9% APR for purchases after the introduc
tory period, and 22.9% APR for cash advances. Annual membership fee: $0. Credit Card B: 0% introductory APR, 20.9% APR for purchases after the introductory period, and 24.9% APR for cash advances. Annual membership fee: $0. What would be a valid reason for John to choose one card over the other? Select the best answer from the choices provided. A. John chooses Credit Card A because any purchases he makes after the introductory APR period will have a 1% APR because of the annual membership fee of $0.
B. John chooses Credit Card B because he will not have to pay any interest on a cash advance if he makes his payments by the due date.
C. John chooses Credit Card A because he will not have to pay any late fees if he makes a payment after the due date since he has $0 annual membership fee.
D. John chooses Credit Card B because he will not have to pay any interest on his purchases during the introductory APR period.
(D) "...because he will not have to pay any interest on his purchases during the introductory APR period."
Step-by-step explanation:
There may be many reasons for John to choose one over the other depending on his future and planned usage patterns. However, answer the (D) is the only correct one in terms of stating a reason that is actually supported by the information in the question. Specifically, there is 0% APR for card B.
What's wrong with the other choices:
Choice A: incorrect statement re APR after intro period (is not 1%); B: incorrect statement re cash advance (is not 0%); C: statement is not supported by anything in the information given (it is an assumption, and is unlikely).
