BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A person knows that he cannot afford to pay $400 for a coat that he really wants. The financially wise action for him to take is to
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buy the coat with a credit card and pay as much as he can each month until it is paid off.
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take a cash advance using his credit card and pay for the coat that way.
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buy a less expensive coat that he can pay for immediately.
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apply for a credit limit increase to cover the cost of the coat.
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Explanation:
Detailed explanation-1: -The best way to avoid paying interest on your credit card is to pay off the balance in full every month. You can also avoid other fees, such as late charges, by paying your credit card bill on time.
Detailed explanation-2: -Principal: The amount of debt, exclusive of interest, remaining on a loan. Principal and Interest to Income Ratio: The ratio, expressed as a percentage, which results when a borrower’s proposed Principal and Interest payment expenses is divided by the gross monthly household income.
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