BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Invest the bonus money until he earns $5, 000 and can pay off the credit card bill.
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Put the money into savings so that he can earns an equivalent rate of interest.
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Pay off $2, 000 of the credit card debt with the bonus so that he pays less in interest.
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Buy the next $2, 000 worth of items that he wants using the bonus money instead of credit cards.
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Detailed explanation-1: -APR, which stands for annual percentage rate, is the yearly cost of borrowing money. If you borrow $1, 000 for a year at a 20% APR, the total to pay back would be $1, 200.
Detailed explanation-2: -For example, if you currently owe $500 on your credit card throughout the month and your current APR is 17.99%, you can calculate your monthly interest rate by dividing the 17.99% by 12, which is approximately 1.49%. Then multiply $500 x 0.0149 for an amount of $7.45 each month.
Detailed explanation-3: -If your issuer uses a daily balance, you’ll divide the APR by 365 days. If the APR is compounded monthly, divide it by 12 months. For example, an APR of 14.99% compounded daily would have a periodic rate of (14.99% / 365) = 0.00041, or 0.041%.
Detailed explanation-4: -A 22% APR means that the credit card’s balance will increase by approximately 22% over the course of a year if the cardholder carries a balance the whole time. For example, if the APR is 22% and you carry a $1, 000 balance for a year, you would owe around $216.99 in interest by the end of that year.